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Measurement of Inflation.
Member rating: No Rating | Words: | Submitted: Mon Jan 12 2004
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Measurement of Inflation Definition of Inflation Inflation refers to the continual increase in prices. The value or purchasing power of money refers to the amount of goods or services one pound can buy. Inflation means the value of money is falling because prices keep rising. Calculating the Retail Price Index The retail price index (RPI) is a monthly survey carried out by the government which measures price changes. The following procedure is used: * A basket of goods and services consumed by the average family is listed. For example, food, clothing and transport are included in the basket. * The price of items in the basket in the base (first) year is noted. * Each item in the basket is given a number value (weighted) to reflect its importance to the average family. For example, food has a higher weighting than transport. * The price of goods in the basket is recorded every month compared...
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