Analysis of inflation (based on Australia)

Inflation can be defined as a ? continue increase in the general level of prices in an economy.? the like unemployment, fanf are is a major issue in economics, nearly related to the fluctuating level of economic activity in a region. In Australia, the Reserve Bank of Australia (RBA) attempts to keep the splashiness rate in the tar cleaveed range of between 2% and 3%.

Economists generally recognise four main causes of rising prices: demand, cost, import and inflationary expectations. In Australia, the average annual rate of inflation in the past 40 years has been at 5.9%, where a ethical purchased in 1966 for one Australian dollar bequeath now cost ten times as some(prenominal) ($1 $9.94 ? measured using the Consumer Price advocator ( consumer price index) method).

quantity INFLATIONThere are many measures of inflation, depending on which basket of goods and run are used as the basis for comparison. In Australia, the best cognise and most widely used measure is the Consumer Price Index (CPI).

Consumer Price IndexThe CIP is a statistical time-series measure of a leaden average of prices of a specified set of goods and services purchased by consumers; and therefore reflect changes in the cost of living (thus considered by some a cost-of-living index).



The measure allows an evaluation of the inflation in an economy, and includes a basket of products & services such as food, alcohol and tobacco, clothing and footwear, housing, health, transport, communication, recreation and education. Not all goods and services are included, but a wide selection is cover to reflect average household spending patterns and a good indication of the overall movement of prices and in the cost of living.

The inflation rate can be calculated using the quest equation:Inflation rate (%)=(Current CPI Index-Previous CPI Index)/(Previous CPI Index) × 100/1Similar to New Zealand, Australia?s Bureau of Statistics (ABS) calculates and...

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