Question

What is the current (12 month) inflation rate as measured by the Consumer Price Index? Describe the pattern of the Consumer Price Index over the past fifteen years? Hint: FRED (Links to an external site.) is your friend. Please note that the inflation rate is not the same thing as the level of the CPI. The inflation rate is measured as the percentage change in the level of the CPI during a period of time.

Answer 1

The current(12 months) inflation rate as measured by the Consumer Price Index ending August 2020 is 1.3%. It has increased from 1% previously, according to U.S. Labour Department Data published on September 11, 2020.

The consumer price index is a statistical estimate constructed using the price levels of a weighted average basket of consumer goods and services. This is representative of the consumption expenditure within the economy. A consistent rise in the CPI shows an overall economic growth and a fall in the pattern of the CPI suggests that people are unable to afford the consumption basket. Therefore, from 2005 to 2020, the pattern of the CPI has constantly been rising with minor fluctuations. The overall rise in the CPI shows that the consumption expenditure has risen over the past fifteen years. The below graph shows the same.