Running Head: CONSUMER PRICE INDEX

Consumer Price Index

Name

Institution

Date
CONSUMER PRICE INDEX 2

Question One:

Educational Services Consumer Price Index

The educational services comprises of Tuition, Other school fees and childcare in the

United States (Goolsbee, & Klenow, 2018). This classification was picked in connection with an

assessed usual month-to-month and annual use due to its importance, reasonableness and

straightforwardness in surveying its impact. This aspect constitutes what are called uncertain

classifications and is excluded along with items contained in the vitality class from the buyer

interest record of the center (Grytten, 2018). The table below shows monthly Educational

Services CPI’s with their corresponding inflation rates, given 1995 as the base year.

XMonthly Consumer Price Index

1995 2005 2010 2015
Jan 247.300 428.300 561.896 677.508
Feb 249.100 430.700 564.378 678.628
Mar 250.100 433.000 567.221 681.693
Apr 251.000 435.400 569.787 684.516
May 252.000 438.100 571.298 686.271
Jun 253.000 440.400 573.555 688.241
July 254.200 442.500 574.851 690.594
Aug 255.600 443.600 576.643 691.881
Sept 256.800 446.600 577.502 694.559
Oct 257.800 448.300 578.158 695.652
Nov 259.000 450.400 580.502 697.440
Dec 260.100 452.700 582.695 698.556
Average 253.8333 440.8333 573.2072 688.7949
Percentage
Change 0% 74% 126% 171%
CONSUMER PRICE INDEX 3

A graph is drawn to show the rise in the consumer price index from the year 1995 to

2015. The graph shows that there is a steady rise in the consumer price index which alternatively

means that an inflation has occurred in between the corresponding years.

Consumer Price Index

800.000

700.000

600.000

500.000

400.000

300.000

200.000

100.000

0.000
n r y y t v n r y y t v n r y y t v n r y y t v
Ja Ma Ma Jul Sep No Ja Ma Ma Jul Sep No Ja Ma Ma Jul Sep No Ja Ma Ma Jul Sep No

The annual average Consumer Price Index in 1995 was estimated at 253.833, which rose

to an average Consumer Price Index of 440.833 in the year 2005. It ascended to 573.21,

estimated in the year 2010 and later settled at an average of 688.79 in the year 2015. Given the

base year as 1995 for the study, there is an increment of 74% from the base year to 2005. The

increments also showed from the base year to 2005 and 2010 with rates at 126% and 171%

respectively. This is formulated in the graph below. This expansion indicates that the cost of

things in educational services certainly increased over that time suggesting that the purchasing

power of the normal consumer entity, ceteris paribus, decreased dramatically as regards to the

classification of sustainability.
CONSUMER PRICE INDEX 4

Educational Services Average Consumer Price Index and

Perc. change
800
700
600
500
400
300
200
100
0%
0
1 2 74% 3 126% 4 171%

Average Percentage Change

Question Two:

Trends in overall inflation

Year Jan Feb Mar Apr May Jun Jul

2019 0.90 1.56 0.73 1.10 0.98 0.97 1.20
2018 0.00 0.20 0.32 0.20 0.22 0.01 0.12
2017 1.54 1.61 1.20 1.44 1.67 2.10 1.98
2016 2.10 1.65 1.53 1.21 1.42 1.50 1.50
2015 2.60 2.31 2.00 1.70 2.23 2.20 1.46
X

Year Aug Aug Sep Oct Nov Dec Average

2019 1.10 1.10 1.02 1.30 1.56 1.89 1.19
2018 0.89 0.89 1.04 1.20 0.80 0.67 0.47
2017 1.62 1.62 1.62 1.60 1.54 1.02 1.58
2016 2.10 2.10 1.98 2.00 0.00 1.22 1.52
2015 1.62 1.62 2.10 2.34 2.40 1.34 2.03
CONSUMER PRICE INDEX 5

The annual average figures found in the top of the tabulation are of concern for this

study, while the monthly figures are accustomed to make a case for the final annual average.

Annual disinflation or deflation occurs when rates are marginally below previous times. Though

this rarely occurs annually. In the year 2015, inflation was the highest at 2.6% in the start of the

year, but settled at a low of 1.34%. This implies that the educational service prices decreased at

the end of the year.

In the year 2016, the year started at 2.10%, then dropped to 0% towards the end of the

year but eventually rose to 1.22%. The annual average rate recorded a decrease of 0.51% from

the previous year. The first quarter of the year 2017, recorded an average rate of 1.45% which

was an equal rate to the last quarter of the year. The mid-year showed some increase to a rate of

2.1% in the month of June. The year 2018 recorded the lowest annual average rate of 0.47%.

This was due to lower overall energy costs which was beneficial to all consumers resulting to

lower prices of services. The year 2019 recorded a fastest rate in inflation with an increase from

0.47% to 1.19%, an increase of 0.72% which was high. This means that, in order to receive an

identical form of services, for example tuition, in previous years, purchasers had to pay

additional from their incomes.

Inflation usually is relatively low and deflation seldom occurs on an annual basis. The

indices above show that the inflation level is usually unfit during the quantity being examined

(Grytten, 2018). In 2015 it dropped by 0.47%, mostly due to the lower price of the energy

commodity. This was a significant advantage for the family as a result of the very low

transportation prices. The lower prices helped ease the burden of money as the financial benefit

from the family did not rise above the level. This left additional revenue in order to use for other

investments (Zhou, & Wang, 2016).

CONSUMER PRICE INDEX 6

Question Three:

Using CPI statistics

The CPI, also known as the Cost of Living Index, is of considerable interest to executives

and, above all, to executives of human capital, but for the fact that inflation has risen or not

(Goolsbee, & Klenow, 2018). As the CPI rate rises, it means that the basket contained in its

economic series has risen. This implies the additional area unit outlay for individuals in order to

receive an equivalent services. The intrinsic existence makes it an associated degree argument

agent of the greenback value by showing the power of attainment. This suggests that the

Government, in collaboration with the various agencies, uses this to see whether or not there is

need to increase the standard of living. In fact, the Government uses this to control the tax rates

and the edges of the pension (Zhou, & Wang, 2016). It also customary check whether or not

employees need a raise to balance the rise in the living price. The index is of particular interest to

human resource executives, as they are responsible for handling social problems such as salaries

and wages.
CONSUMER PRICE INDEX 7

References.

Goolsbee, A. D., & Klenow, P. J. (2018, May). Internet rising, prices falling: Measuring inflation

in a world of e-commerce. In Aea papers and proceedings (Vol. 108, pp. 488-92).

Grytten, O. H. (2018). A Continuous Consumer Price Index for Norway 1492–2017. NHH Dept.

of Economics Discussion Paper No. SAM/26/2018.

ZHOU, M., & WANG, M. C. (2016). Resarch on the Relationship among Local Government

Debt, Economic Growth and CPI under the New Normal. Journal of Lanzhou University

of Finance and Economics, (3), 14.