# Advice 1: How to calculate inflation

Inflation is an indispensable attribute of market economy. Among her reasons for this are several factors which in General terms are as follows: when the same volume of output disproportionately increases the amount of circulating money. Thus money is worthless. Instruction
1
To calculate inflation, using the consumer price index that describes the average level of prices for goods and services in the economy. With this as a basis for determining the value of a so-called market basket – average set of goods and services required to meet the essential needs of one person. In accordance with the law of 31 March 2006 N44-FZ "On consumer basket as a whole," the composition of the basket is defined by three aggregated groups of commodities and services:
• Food
• Household goods (clothes, shoes, linen, household goods, etc.)
• Services (payment of utilities, transportation services, etc.).
2
The consumer price index is relative. To calculate inflation, determine the base year is the period of time in relation to which the estimated change in the price of the same goods and services. To do this, divide the sum of the products of the prices of the current year and output in the base year for the sum of the product of prices and output in the base year. The obtained value is expressed in percent.
3
The task in statistics is often required to calculate inflation for several years. It is known as increased prices for each year separately. For example, you need to calculate inflation for 2 years, if you know that for the first year prices rose by 20%, and for the second 25%. If you take the starting price level for X, the result of the first of the year inflation will be 1.2 X, and at the end of the second year – 1.2 X ? 1,25 = 1,5 H. Thus, inflation in 2 years is 50%.

# Advice 2 : How to calculate consumer price index

The index of consumer prices – one of the ways to measure the average level of prices, which is calculated for a variety of goods and services and, according to some researchers, is the best indicator of cost of living. Instruction
1
The index of consumer prices, calculates the change of prices of goods and services included in the consumer basket. In Russia, the consumer basket was approved on 31 March 2006 Federal law No. 44-FZ "On consumer basket in the Russian Federation". It includes three groups of products and services:
• Food (grain products, potatoes, vegetables, etc.)
• Non-food goods (clothes, medicines, household goods, etc.);
• Facilities (utilities, transportation, etc.).
2
To calculate the index of consumer prices alone, you need a full list of the included in the basket of goods and services, their pricesand the base year and the current market value. Formula index of consumer prices as follows: CPI = ? (C(t) ? T(b)) / ? (C(b) ? T(b)),where C(t) and p(b) – the level of prices, respectively, of the current and base years for the products and services of the consumer basket;
T(b) – list of goods and services in the consumer basket. To calculate inflation, the fraction is multiplied by 100 about thepricestov.
3
Similarly, we can calculate the index of consumer prices and inflation based on its own consumption basket. To do this make a complete range of products and services that are necessary for you and you always use. Write down their current pricess. For personal use you can calculate the index of consumer prices on a monthly basis. Some people described method to calculate the so-called real inflation, which typically does not coincide with the rate of inflation, officially approved. However, nothing surprising in this. It has long been observed that inflation is always higher in the group of inexpensive items which is the majority of the population.
Note
The price index shows how many times the increased (decreased) the cost of production due to price changes or how many percent growth (decrease) of the cost of production as a result of changes in prices. The formula for determining the price index has the form of One of the most important indicators of price statistics, widely used in economic and social policy, is the consumer price index (CPI) .
The scope of products: For the calculation of CPI collected prices on 450 goods and services, of which 156 – food products, 226 – non-food goods and 68 services. The consumer price index includes all major groups of goods and services, on a monthly basis covering about 50 000 price quotations. The second stage is carried out in the national statistics Committee with the use of a modified Laspeyres formula, when 450 short-term price index is aggregated into the national index.

# Advice 3 : How to determine the level of inflation

Inflation in economic systems, manifests itself by raising the General level of prices for various products. Therefore, in the period of inflation for the same money after a certain time you can buy less goods or services than before. So the money lose part of its real value. Instruction
1
To measure inflation are subject to special economic-statistical indicators – indices (rate of) growth and price increases. The price index represents the relative change in the average price level for the conditional period. In turn, the average level of prices is called a weighted average of all prices for products in a certain set, defined consumer basket.
2
The level of inflation is a measure of the average level of price change of production with respect to the base period and is used as a magnitude of inflation, and is expressed in percentage for the year. As a rule, when calculating price index of prices in the base period using the following formula:SP = TSC / TSBG x 100%, gdeep index of the prices of the current period,
TSC – price value of the current period,
TSBG – expression prices of the base year.
3
Measurement of inflation using the growth rate of prices can be determined by the formula:TCP = (TSC-BSC) / BSC x 100% where TCP is the growth rate of prices for the current period,
TSC – the value of the prices of the current period,
Tspp – the value for the previous period.
4
There are different types of indexes price. Chain indices determine the ratio of the price of each following period from the previous one. Underlying or long-term indices define the size ratio of the prices of some period of defined time series with the basic period. It is possible to obtain the value of the underlying index through multiplication of values of chain indexes.
5
A rather important place among the price index is the deflator of GDP or GNP (gross domestic product or gross national product) is a price index in which the consumer basket includes absolutely all final goods or services. This index compares the growth of the General level of prices on the basis of a basket of national product. He Escalada according to the following formula:DWP = STP / SBP x 100%, where DWP – the value of the GDP deflator of the current period,
STP – figure cost of a basket of GDP in prices of the current period,
SBP – value cost of a basket of GDP in prices of the base year.
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