The coefficient of inflation is a measure that characterizes the ratio of the prices of the previous and the current period (year, quarter, month). This index is called the index of inflation or price index and shows the change in the value of a particular set of goods and services. The coefficient of inflation provides an opportunity to assess inflationary processes in the economy.
You can calculate the coefficient of inflation independently. To do this, use the following formula: change in inflation = (Sum of prices of the current period x production of the current period)/(Sum of prices of the base period x production of the base period).
Note that the coefficient of inflation is calculated in a centralized manner and is published in the media. In our country, the calculation of this indicator of inflation is the Federal state statistics service. In the calculations carried out annually, and in the baseline period choose December of the previous year. When calculating the ratioand inflation for the month as a base take the month preceding the calculation.
In the analysis of inflation, you can take into account the core price index. It is determined without taking into account the prices of electricity and food. This is due to the fact that these components can vary significantly from month to month, greatly distorting the value of the main indicator.
The coefficient of inflation is one of the most important indicators of life of the population, as the basis for its calculation is the consumer basket, which consists of many goods and services with fixed consumer prices. The consumer price index is solely a measure of price change, not the cost of living because it does not account for changes in the structure of current consumption of the population.