Consumer Price Index - Index Numbers, Business Mathematics and Statistics Video Lecture | SSC CGL Tier 2 - Study Material, Online Tests, Previous Year

hello everybody today we're going to be
talking about the Consumer Price Index
the Consumer Price Index is another way
like the GDP deflator in being able to
calculate the inflation and the change
in prices and what happens there
inflation is the increase in or decrypt
inflation inflation is the increase in
the price level deflation is decrease in
the price level inflation reduces the
purchasing power of consumers and so the
change in price is measured by price
indexes or indices like I just barely
said the GDP deflator is another one the
CPI is one here so what you first have
to do is you have to fix a basket of
goods so um in the real CPI when they
actually calculated there's thousands
and thousands of goods that are there
but they stick the quantity at a certain
amount they they don't move those up and
down in this case we're just taking two
Goods bread and milk so we fixed the
quantity at fifteen on bread three on
milk and we have a couple of years here
2000 2001 and 2002 of bread and we have
milk
the prices of each of them in the ears
and so how you go about calculating this
is you take five dollars into that for
two thousand you take five dollars times
15 plus two dollars times three
now beat seventy five plus six which
equals 81 okay then you do that for all
years 2001 same six times 15 3 times 399
8 times 15 five times three 135 ok so
now you have those prices now we can go
ahead and calculate the consumer price
index how you calculate that is you take
a year
that you're wanting to to calculate the
CPI in and you divide that by the a base
year's prices you determine the base
year or when you see consumer price
index is they've already determined a
base year and that's what everything is
based on so in this instance let's go
ahead and take 2000 as our base year so
what we'll do in order to calculate this
as we'll take and let's calculate the
CPI for 2002 okay so we take 135 dollars
which is the price here of the goods
divided by eighty one dollars which is
the price in the base year and times 100
that will give you a hundred and sixty
six okay now what you're going to do is
because you have this number you can go
ahead and calculate the inflation but
what you have to do first is this is
just for tooth out
is for 2002 so you can also find that
for 2001 and 2008 here it's always CPI
just like the GDP deflator will always
be a hundred okay so in this case a
hundred let's get rid of these dollar
signs I don't think it's well it is okay
nevermind it's dollars okay so um you
have the dollars 100 120 to 135 okay
let's go ahead and calculate inflation
inflation will be the CPI in the current
year so let's go ahead and calculate the
inflation for 2000 the difference from
2000 to 2002 okay so you take the CPI in
the current year which is 166 minus the
CPI in year 1 in this case base year 100
over 100 times 100 which will give you
see 666 percent inflation from 2000 and
2002 that's pretty high inflation so um
that's how you go ahead about
calculating the CPI hope that he'll