How Inflation is calculated?

Question

How Inflation is calculated?

Answer 1

it is done by the central bank or treasury. they look at the life of the people, to see what goods and services do people use, and how much. for example they say: people eat 5 hamburgers a month, people use 4 gallon of petrol each week and so on. then provide a list of the most goods and services. the price of health care and education is in this list for example, the price of energy, the price of transit and traffic.

Then, they monitor the mean (average) price of these goods and services over the years and all over the country, for example they say the average price of a hamburger in this country is for example 5$, and it was 4$ three years ago, and it was 50cents in 40s.

now they know what things and how much people use, and they know these things worthed how much in past and how much now. they do some calculations, to calculate the weighed average of the prices, and divide this average to the average of past year to see how much the prices are  more than the past year. This "how much" means the inflation over a year in a country or state.

did you get your answer?

Answer 2

inflation is an increase in the value of a currency over time. there are many things that effect inflation, the MPC (monetary policy commity) decide  interest rates and these directly effect inflation, ie higher interest rates - more people save and therefore inflation is low, lower interests and people take out loans and therefore as there is more money in circulation inflation increases as money is less valuable comparativvely. hope this vague explanation helped.. its been a long tiem since i studied economics

Answer 3

with a calculator

Answer 4

with a couculator

Answer 5

Inflation is an increase in the price of a basket of goods and services that is representative of the economy as a whole.

Most developed countries use the Consumer Price Index (CPI) to calculate inflation. Some countries use Wholesale Price Index (WPI) for calculating the inflation.

WPI is the index that is used to measure the change in the average price level of goods traded in wholesale market. In India, a total of 435 commodities data on price level is tracked through WPI which is an indicator of movement in prices of commodities in all trade and transactions.

The data for this is available weekly and this helps the government to calculate the inflation weekly.