CPI is the main indicator of inflation that measures the change in the value of goods and services which are in the consumer basket, and in constant demand.Usually, it is based on the pre-selected consumer basket.Selection of its membership - it is quite a difficult task, which is based on special statistical research since it must reflect the composition of the goods consumed, typical of a particular country.Changes in prices on these products must objectively demonstrate the direction of economic processes that are taking place here.
Statistics in the United States covering 19,000 retail businesses, as well as 57 thousand households - it is a representative sample of 80% of the population.The consumer basket includes 55.9% and services 44.1% of the goods.The consumer price index for the characteristics of inflationary pressures in the country, with a very important economic value.
value for Forex
On this market the consumer price index - quite a significant figure, which has a great influence, it is for him, market participants are trying to determine or predict the coming inflation rate, since he is the main thing for the country.
The composition of the above consumer basket includes food, travel expenses, education, utilities, health, leisure, clothing and so on.It is important to understand that each country has its own consumer basket, which is formed according to the statistical surveys, as well as the conditions of the state or region.
consumer price index is used to determine the cost of living, which is very important for the planning of the budget.If the calculations do not include sectors that are considered to be the most variable, in particular, energy and food, the index will be much more authentic.
How to respond to the output of this indicator?Here there is a direct relationship.If it's high, then the economy is considered good, and it will lead to higher interest rates, which would make the currency highly attractive to investors.
Relationship with other indicators
index of consumer prices has an impact on the assessment of purchasing power parity in the long run on the states and on the monetary policy on interest rates set.Normally, the growth of this indicator causes reduction of demand and the volume of retail sales in the long term, and if it is a short, here the growth shows the high consumer activity.The indicator is influenced by factors such as prices of manufactured goods, the money supply, import prices.
Features of behavior indicator
in the index includes goods and services, and the main difference is just in their composition.There are two rules for the assessment of inflation trends in these sectors.The most volatile sector is commodity inflation.This is the main reason consists in the fact that trade depends much more on energy and food prices.These two components of the industry almost half of commodity components, and therefore the change in prices is observed here stronger.Less volatile inflation in the service sector, so it lags behind the inflation of goods.On the average, minimum and maximum price growth in the services behind six months of price fluctuations in the commodity sector.
If published price index of consumer goods, the market looks at the changes that take place every month in the overall index, which gives the highest percentage of inflation.
