Compare two databases dealing with CPI by major expenditure categories Essay

Compare two databases dealing with CPI by major expenditure categories i.e. from the indices starting with U.S. All Items (1982 - Essay Example However, this essay aims at analyzing these effects from the purchases made frequently from many items with relatively stable prices. In most cases, the CPI is often applied in adjusting the income, retirement benefits, lease payments, and school lunch benefits. Other included items in this category include alimony and the tax brackets. Notably, the mode of CPI application in the United States affects nearly all Americans since it is based on buying habits of average consumers (Strawser and Ryan, 2010). However, it may not be a perfect reaction of an individual price experiences. Nonetheless, the CPI is fundamentally feasible economical method for statistical provision in its appropriate applications. Numerous or nearly all the nation CPI results usually differ from individual’s price expenditure, a vital factor to be considered in this statistical application is how a person spends his/her money/income. The consumer expenditure survey estimates revealed that each consumer ser vice or good produces CPI expenditure weights that are equally significant relative to all other market bracket good and services (Strawser and Ryan, 2012). ... The same effect will increase the consumer average significantly. The CPI usually divides the consumer bracket market into groups of goods and services and each of the brackets can be estimated approximately using expenditure pattern. This can only be done using an expenditure pattern that can be used us1ed to compare different but significant data sets. From the data sets below, the approximate weights for all the Urban Consumers (CPI-U) are as per the columns data set. It should be noted that some data sets show a sharp difference from the CPI average (Schuldes, 2011). This is an indication of difference changes in price measures in the total market bracket. For instance, the expenditure pattern with high medical care expenditure appears may be tabulated for the month of October 2001 (Strawser and Ryan, 2010). Relative Importance Table 1: individual expenditure Increment in the prices of food and beverages by five percent and medical care costs by ten percent with no changes in the prices of other commodities will still change the overall CPI within the price index by nearly 1.4 percent. Table 2: National CPI-U Average Notably, the same changes can affect CPI on yearly basis and the same effect can be analyzed from the statistical data presented in the table below. Table 3: different databases dealing with CPI by major expenditure categories on an yearly basis Graph 1: expenditure per year on the reflection on annual inflation Graph 2: annual inflation trend. The graph 1 & 2 above are obtained from the table 3 above. There indicate that increase in the average level of prices increase leads to Inflation that increases the CPI thereby affecting the spending habit of consumers within