Inflation Calculator
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The Inflation Calculator is the process of noting the changes in the purchasing power of the mass. The calculator utilizes the monthly data available on consumer and retail prices which is the CPI data to calculate the alterations that take place in the cost of buying a representative basket of goods and services. This basket of goods and services includes food, clothing, shelter, furniture, conveyance and entertainment. The calculation is done on the recent available records on the CPI so that the latest change could be recorded.
Inflation indicates a rise in the general price level. Prices reach an all time high and the supply of goods do not match up to the level of money supply. Hence, devaluation of money occurs. The economy facing such a situation is into knee deep trouble since capital accumulation suffers . The demand for goods rise without a rise in the supply of goods. Instead the supply of money increases.
Inflation was around 3% per annum during the 20th century. It recorded a higher rate than that immediately after both world wars probably due to repressed demand versus used-up supply. Again during the second half of 1970s probably due to the government’s policy of “printing press financing” the inflation rate increased. Inflation remained low during the boom of the 1990s,it is inspiring to find out that with effort an economy could stabilize the prices.
Exclusion of Energy Prices
However, very strangely the energy prices are excluded from the CPI because the energy prices are considered to be volatile. They are volatile since the change in oil prices does not reveal much about the overall inflation rate of the economy. There is a special index for the energy prices.
Australian Inflation Calculation
The Australian inflation calculator is a good example. Both the annual and quarterly data are available from the respective years of 1901 and 1922. Therefore the calculation could be done using the data from June 1922 for the quarterly calculation and from any year between 1901 and the most recent complete year calendar for the annual calculation.
