我的小天地

Consumer Pricing Index

And now class,let's switch gears to discuss a different topic-Consumer Prcing Index,CPI for short.If you switched on the TV and heard on the news that the CPI of Canada was 2.1%,what does that mean?In a nutshell,it means that Canadian consumers paid 2.1% more than in the previous year for the goods and services and included in the CPI basket.Although prices of goods and services rise and fall over time,when prices change too dramatically, they can have negative effects on an economy.In order to tell if an economy experiencing inflation,deflation and stagflation,we use the CPI as a gauge of the prices of goods and services.Believe it or not,when the Department of Labors is bureau of Labor Statistic releases the CPI data monthly.The CPI's results are widely anticipated and watched.Who would eagerly await the results,you might ask? Well, the CPI plays a role for many key finacial decision makers,including personal investors,the Bank of Canada in Canada,and the Fedral Reserve in the U.S..The CPI helps the bank of Cannada forecast the interest rate policy and other decision of major banks and corporations.I mensioned the CPI basket before and now I want to expand on what is the basket is and how we get the information.The base-year market basket,which makes up the CPI,comes from the details of expenditure information collected from the serveys of thousnad of families.The information is not random collected,instead,the information is gethered through interviews and diaries kept by participants who have agreed to disclose their buying habits.The basket is divided into eight groups:food and beverages,housing and apparel,transportation,medical care,recreation,education and communication,and other goods and services,and Includes more than two hundred categories.Finally,the prices of eight thousand items are collected monthly from thousands of retail stores,service establishments,rental units and doctors' offices.