{"id":43936,"date":"2018-07-17T02:00:54","date_gmt":"2018-07-17T06:00:54","guid":{"rendered":"http:\/\/quotulatiousness.ca\/blog\/?p=43936"},"modified":"2018-06-27T10:30:02","modified_gmt":"2018-06-27T14:30:02","slug":"measuring-inflation","status":"publish","type":"post","link":"https:\/\/quotulatiousness.ca\/blog\/2018\/07\/17\/measuring-inflation\/","title":{"rendered":"Measuring Inflation"},"content":{"rendered":"<p align=\"center\"><iframe loading=\"lazy\" width=\"853\" height=\"480\" src=\"https:\/\/www.youtube.com\/embed\/0jJKjgE3qfE\" frameborder=\"0\" allow=\"autoplay; encrypted-media\" allowfullscreen><\/iframe><\/p>\n<blockquote><p><strong>Marginal Revolution University<\/strong><br \/>\n<strong>Published on 10 Jan 2017<\/strong><\/p>\n<p>Inflation is common in a modern economy. Shifts in supply and demand for goods and services cause prices to change accordingly. When the average level of prices rises, that\u2019s inflation. It means that you\u2019ll need more money to purchase the same stuff.<\/p>\n<p>Inflation in the United States can be measured using the Bureau of Labor Statistics\u2019 Consumer Price Index (CPI) \u2013 a weighted average of the price increases. We can calculate the inflation rate by the percentage change in the CPI over a given period of time.<\/p>\n<p>How much do prices actually change? Well, using FRED, we can see that, over the past thirty-three years, prices have more than doubled. That may seem like a lot. However, wages have also risen, on average, by more than prices during that time period. Inflation doesn\u2019t necessarily mean that we\u2019re worse off.<\/p>\n<p>The inflation rate in the United States has averaged at about 2.5% per year since 1980, which is fairly low and indicative of a stable economy. Prices may be increasing, but the changes are small. Wages have time to catch up. You can be confident that the $5 in your pocket isn\u2019t going to be worth drastically less in a year.<\/p>\n<p>Let\u2019s take a look at a different scenario &mdash; one that\u2019s playing in Venezuela right now. As the country faces an economic crisis, inflation is skyrocketing. Rates reached 180% in 2015 and have continued to rise since. 5 bol\u00edvar in your pocket could be worth less even by the end of the day.<\/p>\n<p>But Venezuela still doesn\u2019t compare to the hyperinflation that Zimbabwe experienced in the 2000s, reaching dizzying rates of billions of a percent per month. (See MRU\u2019s previous video for more!) <\/p>\n<p>While some inflation is perfectly normal, high rates of inflation make it difficult for consumers to use a nation\u2019s currency. If the value is changing a lot by the week, day, or even minute, people don\u2019t want to hold onto or accept the currency for goods and services &mdash; leading to a full blown currency crisis. <\/p>\n<p>Up next, we\u2019ll take a deeper dive into what causes inflation and its consequences.<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>Marginal Revolution University Published on 10 Jan 2017 Inflation is common in a modern economy. Shifts in supply and demand for goods and services cause prices to change accordingly. When the average level of prices rises, that\u2019s inflation. It means that you\u2019ll need more money to purchase the same stuff. Inflation in the United States [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":35193,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[25],"tags":[165,1093,290],"class_list":["post-43936","post","type-post","status-publish","format-standard","hentry","category-economics","tag-inflation","tag-macroeconomics","tag-statistics"],"jetpack_featured_media_url":"https:\/\/quotulatiousness.ca\/blog\/wp-content\/uploads\/2016\/06\/favicon.png","jetpack_shortlink":"https:\/\/wp.me\/p2hpV6-bqE","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/43936","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/comments?post=43936"}],"version-history":[{"count":1,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/43936\/revisions"}],"predecessor-version":[{"id":43937,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/43936\/revisions\/43937"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/media\/35193"}],"wp:attachment":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/media?parent=43936"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/categories?post=43936"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/tags?post=43936"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}