Question

Visit the Bureau of Labor Statistics (Links to an external site.)Links to an external site. website and explore the Consumer Price Index section. Read the "Current CPI Economic News Releases" and summarize the latest release. Did the CPI increase or decrease? What caused the index to increase or decrease? Explain. Visit the inflation calculator (Links to an external site.)Links to an external site. section and easily find out how the buying power of the dollar has changed over the years. Experiment with three amounts, in different starting years, and report your findings. Are you surprised at how purchasing power has changed? Share your thoughts.

At Least 200 words

Answer 1

The Consumer Price Index decline by 0.1 percent in May 2020. There is huge decline in the indexes of motor vehicle insurance, energy and increase in the food and shelter which result the monthly decrease in the seasonally adjusted items. The food index increased to 0.7 percent in May with rise in the index for meats, poultry, fish and eggs. The energy index decline by 1.8 percent in May with a decline of the 10.1 percent in April. The energy index declined 18.9 percent in the past 12 months. The shelter index rose 0.2 percent in May. The index for household furnishings and operations rise to 0.4 percent in May. The chained CPI decreased to 0.2 percent. The CPI measure all the expenditure of the professionals, self employed, poor and unemployed, retired people etc. in both urban and rural. The most important reason for the fall in CPI is rise of the price of goods in the basket. There is a high rate rise in the inflation rate.
With fall in the CPI will increase the purchasing power of the dollar in the foreign market. The US dollar experienced average inflation of 1.38 percent in current period. This will cause rise in the value of dollar. If comparing the dollar rate and the inflation rate in last three years; in 2018 the dollar rate is $2042.52 and the inflation rate is 2.49, inflation rate and dollar vale are $2078.52 and 1.76 in the year of 2019, the inflation rate in 0.29 and the dollar rate is $2084.50 in 2020. This statistics shows that the dollar value increased with respect to the inflation rate. The rise in the value of the dollar rate shows the increasing purchasing rate.