How is inflation measured?

Measure of inflation :
Consumer price index (CPI)
OR
Retail Price Index (RPI)

 Basket of consumer goods & services

- it measures how price of this basket
change over time.
- price of basket
, average price
Impossible to measure inflation
so what they do???????
- agency economic data creates list of
typical goods & services consumed by
average household.
- price of the items is measure every month/
year, to know change in the price of basket.

 Change in the price of basket,

reflected the CONSUMER PRICE
INDEX!
Some goods & services consumed
are more important than others -
weight (importance)

 How did you know the price of the

items in the basket??????????
- by collecting prices from shopping
outlets throughout the country ->
national average price is determined.
Change in the price index ->
inflation rated