Consumer Price Index - Index Numbers, Business Mathematics and Statistics

# Consumer Price Index - Index Numbers, Business Mathematics and Statistics Video Lecture - Business Mathematics and Statistics - B Com

115 videos|142 docs

## FAQs on Consumer Price Index - Index Numbers, Business Mathematics and Statistics Video Lecture - Business Mathematics and Statistics - B Com

 1. What is the Consumer Price Index (CPI)?
Ans. The Consumer Price Index (CPI) is an economic indicator used to measure the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. It reflects inflation or deflation in the economy and is often used to adjust wages, pensions, and social security benefits.
 2. How are the index numbers calculated for the Consumer Price Index (CPI)?
Ans. The index numbers for the Consumer Price Index (CPI) are calculated using a weighted average of price changes for each item in the market basket. The weights assigned to each item are based on the average expenditure patterns of urban consumers. The formula used is: (Current Period Cost / Base Period Cost) x 100.
 3. What is the significance of the Consumer Price Index (CPI) for businesses and consumers?
Ans. The Consumer Price Index (CPI) is significant for both businesses and consumers. For businesses, it helps in making pricing decisions, wage adjustments, and forecasting future demand. For consumers, it provides a measure of the cost of living, helps in budgeting, and enables comparisons of purchasing power over time.
 4. How often is the Consumer Price Index (CPI) updated?
Ans. The Consumer Price Index (CPI) is updated on a monthly basis by the Bureau of Labor Statistics (BLS) in the United States. The data is collected throughout the month, and the index is usually released around the middle of the following month. This frequent updating allows for timely monitoring of inflation and economic trends.
 5. How can the Consumer Price Index (CPI) be used to calculate inflation rates?
Ans. The Consumer Price Index (CPI) can be used to calculate inflation rates by comparing the index numbers of different periods. The inflation rate is calculated as the percentage change in the index from one period to another. For example, if the CPI increased from 100 to 105 over a year, the inflation rate would be (105-100)/100 x 100 = 5%.

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