Consumer Price Index

Consumer Price Index What is it? The Consumer Price Index (cost-of-living index) can be delimitate as an index of the kinds in the cost of goods and twist to a typical consumer, based on the costs of the said(prenominal) goods and run at a base period. (CPI, 1995) It consists of a basketball hoopful of goods and suffices that represent purchases made by mobs. The goods and ope consecrate in the basket and their recounting importance are reviewed every ternion long time in New Zealand to see to it the basket remains up to date. Each good or service in the basket is appoint an expenditure weight that represents its relative importance in household spending patterns (Statistics NZ CPI resource, 2008). Goods and services that are of higher(prenominal) importance to households are given greater weights and declare a greater influence on the CPI. The weight assigned determines how a great deal jounce a financial value movement for a particular good has on the g eneral CPI. For example, if households spend more on gas pedal than milk, a v percent increase in the price of petrol would have a greater impact that a five percent increase in the price of milk. Changes in the CPI are utilise to assess price changes associated with the cost of living. How is it utilize? The CPI can be used to show how prices that household face have changed overtime.

This is the percentage change betwixt assorted periods for each class, subgroup, group or the overall CPI. It can besides be used to champion get monetary form _or_ system of government (Statistics NZ CPI resource, 2008) . In New Zealand, the constitution Targets ! Agreement between the Governor of the Reserve bank and the minister of religion of pay aims to keep annual CPI movements between 1 and 3 percent. From this, the Governor either increases or decreases the official coin rate which has an impact on the mortgage interest pass supposition households pay. Another important use of the CPI by the heavy(p) medication is to adjust New Zealand Superannuation and unemployment benefit payments yearly. This is to help ensure that these payments maintain their purchasing...If you want to get a wide-cut essay, localize it on our website: OrderCustomPaper.com

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