Consumer Price Index (CPI)

The Consumer Price Index, CPI for short, is an important indicator for the description of price changes in the market. A standardized basket is considered in its price development, which is filled with usual consumer goods and services of urban households Circa 87% of the American population. The purpose of the whole is to record price changes for the consumer. The basket contains representative goods whose prices can be recorded at certain intervals and are taken into account with a certain weight in the etoro total price of the goods basket.

The CPI can mainly be used to quantify inflation. The value of the indicator can also be used to derive the current value of salaries as well as price-regulating measures such as anyoption the setting of guide rates or the adaptation of social benefits. Thus the CPI is one of the most important statistical indicators of the economy and is subject to constant monitoring by the financial markets as well as politics. Changes in the CPI value cause major changes in the price behavior of the exchange, so this indicator is in the repertoire of many investors.

The Bureau of Labor Statistics (Statistical Department of the US Department of Labor) contributes the data needed every month to about 23,000 businesses, and about 50,000 representative households from 87 urban regions are included in the surveys, Is determined. After reviewing the raw data, they are adapted using statistical methods, the shopping cart consists of eight main areas:

  • food
  • Housing Copy Trading costs
  • Garments
  • Transport
  • Health issues
  • Leisure
  • Education and Communication
  • Other (hairdresser, consumer goods such as cigarettes and alcohol, extra expenses)

In order for the basket to remain representative, its exact composition is checked periodically and, if necessary, modified.

Social Trading The data obtained from the interviews are then evaluated according to the Laspeyres method by referring to a base year. These are in the American space the years 1982-84; Whose values ​​are set to the arbitrary value of 100. Each subsequent value from the interrogation periods is considered as the price change in relation to the underlying value can be expressed. A percentage value is obtained, which represents the inflation rate if wages remain the same.

Valuation of the CPI

Since the years 1982-84 are used as reference values ​​for the CPI, this is criticized because it is considered antiquated. New economic sectors linked to the Internet distort the results so that only the definition of new basic years could save the link person CPI from being an antique. This has also been recognized, so there is a second CPI calculated with the base year 1999, which is not regularly published every month. However, this is regularly adjusted and is therefore better suited 24option to the current market than the original CPI.

Since the old CPI is only revised once in the decade, according to the opinion of many experts, it no longer corresponds to the current consumer behavior of the final consumer. Nonetheless, the long-term trends and inflation rates are clearly visible as the old CPI is very wide-ranging and broadly diversified. The time delay in the publication is also minimal and is a maximum of 3 months. Precisely because of the economic crisis with the turn of the millennium and the plus500 rapid development in the digital world, demands for the choice of a younger base year such as the 2004-06 interval often arise.

The German consumer price index

In addition to the American CPI, there is also a comparable German index, which may be even more interesting for investors in the local market. When it is compiled, the price is determined by 600 price monitors in 188 municipalities and cities. In addition, a search is carried out across the catalog through catalogs or online shops. In order to weigh the products according to their importance, surveys are carried out every 60 years among 60,000 German households, which have previously documented their expenses.

There are 12 categories available in the German standard shopping cart: IQ Option

  • Food and soft drinks
  • Spirits,