Question

Discuss ways in which the consumer price index might affect your life.

Answer 1

The CPI helps determine how big your paycheck is, very possibly. Most employers make use of the CPI to decide, officially or informally, how much of a cost-of - living increase to provide workers. Moreover, many states index their minimum wage by increasing the overall CPI. The CPI also helps decide how much falls out of the income, as the Treasury uses this to change the rates for tax brackets. And many states are using CPI data to calculate and adjust the compensation payments for workers.

The Food and Nutrition Programs of the U.S. Department of Agriculture uses CPI data to assess the annual rates and cost changes for Nationwide School Lunch and School Breakfast Programmes. This is also checked with the CPI to change the qualifying requirements for such programmes

The CPI also has the power to influence where you live. Many landlords tie rent changes to CPI increases; rent increases for certain properties in some cities can not exceed the CPI rise. If you plan to use government facilities, the CPI will also come into play; the CPI for leasing is used to change rates for the use of federal facilities.

Goods and services costs fluctuate over time but the consequences will disrupt an economy when prices change too quickly and too soon. The Consumer Price Index ( CPI), the main price gage for goods and services, shows whether the economy is experiencing inflation, deflation, or stagflation. The results of the CPI are widely anticipated and watched; the CPI plays a role in many key financial decisions, including the Federal Reserve interest rate policy and major banks and corporations hedging decisions. Individual investors may also benefit from watching the CPI when making decisions regarding hedging and allocation.