METHOD OF MEASURING INFLATION FOR THE CONSUMER PRICE INDEX

摘要

A method of measuring a more accurate rate of inflation is provided. Themethodconsists of first creating a necessities index by selecting a plurality ofhousehold expenditureswhose price changes are to be measured over the time period. The plurality ofhouseholdexpenditures must include only those expenditures which are subject to timeconstraints. Thenecessity index will be restricted to household expenditures for food,transportation, shelter,clothing, footwear and hygiene products. The rate of inflation can thin bederived by measuringthe rate of inflation of the necessities index. The method can be renderedmore accurate byexcluding from the necessities index any expenditure which is of a luxuriousnature. The methodcan be further refined by including into the necessities index householdexpenditures which aremade by a great majority (approximately 95%) of households.