Types of Inflation
Demand-Pull Inflation
Cost-Push Inflation
Built-In Inflation
How Do We Measure Inflation?
The most common ways to measure inflation are the C:
Consumer Price Index
This index measures chances in the price level of a weighted average basket of consumer goods and services purchased by households.
What is included:
- Food and Beverages (breakfast cereal, milk, coffee, chicken, wine, full service meals, snacks)
- Housing
- Clothes
- Transportation
- Medical Care
- Recreation
- Education and Communication
- Other Goods and Services
What isn’t included:
The CPI does not include investment items like stocks, bonds, real estate, and life insurance. These items are related to savings, rather than day-to-day expenses related to consumption.
Wholesale Price Index
Producer Price Index
PCE Index