Conservative Economic Commentary | Topic: Consumer Price Index

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Subject: consumer price index

A consumer price index (CPI) is a measure estimating the average price of consumer goods and services purchased by households. A consumer price index measures a price change for a constant market basket of goods and services from one period to the next within the same area (city, region, or nation). It is a price index determined by measuring the price of a standard group of goods meant to represent the typical market basket of a typical urban consumer. Related, but different, terms are the United Kingdom’s CPI, RPI, and RPIX. It is one of several price indices calculated by most national statistical agencies. The percent change in the CPI is a measure estimating inflation. The CPI can be used to index (i.e., adjust for the effect of inflation on the real value of money: the medium of exchange) wages, salaries, pensions, and regulated or contracted prices. The CPI is, along with the population census and the National Income and Product Accounts, one of the most closely watched national economic statistics. (Wikipedia Jan 2010)

Federal Reserve

Can the Fed really manage inflation?

By John Schroy, on July 5th, 2006 |

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It has been widely-publicized that Ben Bernanke, the new Federal Reserve Chairman, has strong views regarding the Federal Reserve Bank’s responsibility and ability to control inflation in the United States. Most of the discussion about interest rates seems to start with the assumption that interest rates do indeed control inflation and that the Federal Reserve’s ability to rig short-term rates gives it the power to stabilize the value of money.

But is this assumption reasonable?

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