Consumer price index (consumerpriceindex), also known as the consumer price index, referred to as the CPI. is a macroeconomic indicator to reflect the price level of consumer goods and services generally purchased by households changes in the situation.
The purpose of compiling the consumer price index is to understand the basic situation of price changes across the country, to analyze and study the impact of price changes on the social economy and the lives of residents, to meet the needs of governments at all levels to formulate policies and plans, to carry out macro-control, as well as to provide a reference for the national economic accounting and basis for the state to issue price subsidies to the residents of the basis.
Expanded Information
Basic Functions
1.Measurement of Inflation (Deflation).CPI is an important indicator of inflation. Inflation is a general and sustained rise in the price level. the level of CPI can indicate the severity of inflation at a certain level;
2, national economic accounting. In national economic accounting, a variety of price indices are needed. Such as the consumer price index (CPI), producer price index (PPI) and the GDP deflator, accounting for GDP, so as to remove the impact of price factors.
3. Contractual indexing adjustments. For example, in salary and compensation negotiations, because employees hope that salary (nominal) growth can be equal to or higher than the CPI, and hope that nominal salary will be automatically adjusted in line with the rise in the CPI. The timing of the adjustment is usually after inflation occurs, and the magnitude is lower than the actual inflation rate.
Baidu Encyclopedia - CPI Index
What does cpi mean in layman's terms CPI is a word that may be a little more esoteric for us cpi index, so we'll talk about a little bit more layman's terms to understand it a little bit better. Here is what I organized for you what cpi means, for your reference!cpi is what it means
CPI is the consumer price index (consumer price index) for short. Consumer price index is a macroeconomic indicator that reflects changes in the level of consumer prices generally purchased by households. It is a measure of the price level of a representative group of consumer goods and services over time and changes in the relative number, is used to reflect the price level of consumer goods and services purchased by households changes.
The consumer price statistics survey is the final price of social products and services, on the one hand, closely related to the people's lives, but also in the whole national economy price system has an important position. It is an important indicator for economic analysis and decision-making, price level monitoring and regulation and national economic accounting. Its rate of change reflects, to a certain extent, the degree of inflation or contraction. Generally speaking, the price of goods across the board, a sustained increase is considered to have occurred inflation.
How to interpret the CPI
I. Concepts
The CPI (Consumer Price Index) is one of the government's measures of inflation. In layman's terms, CPI is the percentage increase in the price of goods on the market. In general, market economies consider CPI to be within an acceptable range of 2-3%, depending on the cpi index. Personally, I think the CPI is always too high is not good, high economic growth rate will pull up the CPI, but the price index growth rate faster than the growth rate of the average income of the people must not be good, and it is difficult to exceed the average wage growth rate of 3-4%.
Second, the significance of the CPI
CPI price index indicator is very heavy. In the classroom, the teacher also said that the high and low CPI directly affects the changes in the capital market, affecting the country's macro-control. And revelatory, must be carefully grasped, because sometimes published the index rose, the currency exchange rate to the good, and sometimes the opposite.
Third, how to interpret the CPI
The level of the CPI indicates the purchasing power of consumers, but also reflects the state of the economy, if the index fell, reflecting the economic recession, is bound to be unfavorable to the currency exchange rate trend. But if the consumer price index rose, the exchange rate is necessarily favorable? Not necessarily, it depends on how much the CPI "rises". If the index rises moderately, it means that the economy is stable and upward, which is of course favorable to the country's currency, but if the index rises too much, it has a negative impact, because the price index is inversely proportional to the purchasing power, and the more expensive the price, the lower the purchasing power of the currency, which is inevitably unfavorable to the country's currency. The effect of the index on foreign exchange rates is even more complex when the impact on interest rates is taken into account. When a country's consumer price index rose, indicating that the country's inflation
rate rose, that is, the currency's purchasing power is weakened, on the contrary, when a country's consumer price index fell, indicating that the country's inflation rate fell, that is, the currency's purchasing power rose. However, since inflation control is a top priority in every country, a rise in inflation brings with it the opportunity for interest rates to rise, thus favoring the currency. If the inflation rate is controlled and falls, the interest rates will also tend to fall.
Four categories
In addition, the fact that the CPI already reflects changes in consumer housing prices. Not to include commodity housing (assets) price changes in the scope of CPI statistics, does not mean that the CPI does not reflect the changes in the price of residential (consumer) prices. CPI price changes in the residential category is reflected through four categories:
1, building and renovation materials, mainly masonry gray gravel, cement, chemicals and so on.
2, rental housing, mainly public and private housing rent changes.
3, owned housing, mainly housing loan interest rates, changes in property costs. It should be noted here that some foreign countries is currently through the housing loan interest rate changes to reflect the price changes of owned housing (the theoretical basis is: owned housing, whether it is a loan to pay or own savings to pay for the purchase of funds in the form of housing, that is, your own home is in the form of money, and the price of the funds to buy a home is the interest rate of the loan, and therefore changes in the interest rate of the housing loan also reflects the price changes of owned housing). change in the price of your own home).
4. Changes in the price of water, electricity and fuel.
CPI impact on the stock market
In general, prices rise, stock prices rose; prices fell, stock prices also fell. Commodity prices on the stock market prices mainly in the following four aspects:
1. Commodity prices appear to rise slowly, and the magnitude is not very large, but the rate of price increase is greater than the rate of increase in borrowing rates, the value of the company's inventory of goods rose, due to the increase in product prices is higher than the increase in the cost of borrowing. Thus the company's profits rise and the stock price rises as a result.
2. When the price of goods rises too much, the stock price does not rise accordingly, but falls. This is because the price rise caused by the company's production costs, and rising costs can not be completely passed on through the sale of goods, thus reducing the company's profits, the share price also decreased.
3. Rising prices, commodity market transactions show prosperity, sometimes the stock is stuck in the low time, people are keen to timely consumption, so that the share price fell; when the commodity market rose back to the fall, on the contrary, it has become the best time to invest in stocks, which caused the rise in share prices.
4. Prices continue to rise, resulting in an increase in the role of stock investors' sense of security, so investors from the stock market out of the transfer to movable or immovable property, such as real estate, precious metals and other value-retaining items, bringing about a reduction in the demand for stocks, and thus make the stock prices fall.
In times of economic crisis and recovery, the CPI and stock indices rise and fall together. Economic boom period is also the same, but after excessive prosperity on the recession period, the higher the CPI the more the stock index fell! Like now, the CPI stage topped, the stock only dare to rise up!
Slightly moderate rise in the stock market has a boost, but vicious rise will hit the stock market, because the vicious rise will have a negative impact on listed companies, while the government will take a tightening of monetary policy, resulting in the outflow of funds from the stock market.
CPI Consumer Price Index (Consumer Price Index), also known as the consumer price index, is to reflect the price of goods and services related to the lives of residents statistics out of the price change indicators, usually as an important indicator to observe the level of inflation. Generally speaking, when the CPI3% increase can be called Inflation, that is, inflation; and when the CPI5% increase is called Serious Inflation, that is, serious inflation.
Theoretically, the CPI and the stock market does not have a functional relationship. But it does affect the stock market through the supply and demand of money. In the loose monetary policy, the bank deposit and loan interest rates are lower, then the bank of social liquidity funds will be less attractive, the total bank savings deposits will even be negative growth. And the stock market and real estate and other areas of the investment market will attract liquidity funds into, and then pull up prices and stock index. But the stock index can not maintain a sustained rise, the market liquidity is too much, the CPI will continue to rise, the country will increase the intensity of monetary and fiscal policy adjustments, the introduction of tight macro-control policies. Such as the continuous upward adjustment of commercial bank reserve requirement ratio and interest rate hike, liquidity tightness is bound to be transmitted to the stock market, the funds will flow from the housing market and stock market, resulting in changes in the stock index and housing prices.
CPI rise in the process, there are horizontal and vertical two points to note:
1, from the horizontal inter-industry comparison, CPI continued to rise will trigger the stock market structural adjustment. Most of China's past inflation is mainly due to too much money caused by, but too much money is not an average or at the same time flow to various industries, but first into the strong sector or strong industry. Therefore, a period of time, some of the more active sectors will likely to remain stable or upward strength; national policy to encourage or protect the industry sector will likely to enter a new growth cycle; and for the national restrictions on traditional industries, and will be affected by the continued rise in the CPI and the impact of the regulatory policy may be a decline in profitability of the industry sector stock prices will fall.
2, from the vertical CPI different periods of development, CPI continued to rise also prompted stock market investors to be vigilant about asset price risk. In the pre-CPI rise (moderate inflation), the investment direction will shift to the stock market such a high return investment market. Hyperinflation occurs in the later stages of the rise in CPI, which can lead to an increase in the cost of capital for listed companies (higher cost of corporate loans) and a decrease in earnings, causing the price-to-earnings ratio of stocks to rise. As the stock market bubble is getting bigger and bigger, stock prices will eventually fall, and its attractiveness to capital will gradually weaken, while the bank interest rates continue to increase, shareholders have less desire to invest in stocks, withdrawing from the funds circulating in the stock market, leading to a decline in the stock index.
Historical data research shows that when moderate inflation (CPI: 2%-5%), the Shanghai index is affected by very little, and even accelerated upward (such as the Shanghai index in 2007). In a period of mild inflation, the slight increase in commodity prices will stimulate a certain
increase in corporate profits to reach a reasonable small premium, which in turn will have a positive impact on the stock market. When the CPI breaks through 5% later, generally speaking, the Shanghai index to a dangerous period, the probability of new highs or maintain a solid at the top is not great, but the possibility of new lows will be more and more. China's last serious inflation in 1993-1994, the poor performance of the Shanghai index during this period of time for all to see ****. When severe inflation occurs, the currency is extremely tight, corporate profits fell dramatically, the stock market is naturally depressed. There is no bull market with high inflation.
What does CPI mean and what does its rise and fall represent?CPI is the consumer price index (consumer price index) for short. The consumer price index is a macroeconomic indicator that reflects changes in the price level of consumer goods and services generally purchased by households.
It is a relative measure of the change in the price level of a representative set of consumer goods and services over time, and is used to reflect changes in the price level of consumer goods and services purchased by households.
The rise and fall of the CPI represents the impact on the stock market.
Functional Impact
1. Measure of inflation (deflation).CPI is an important indicator of inflation. Inflation is a general and sustained rise in price levels. the CPI can indicate the severity of inflation at a certain level;
2, national economic accounting. In national economic accounting, a variety of price indices are needed. Such as the consumer price index (CPI), producer price index (PPI) and the GDP deflator, accounting for GDP, so as to remove the impact of price factors.
3. Contractual indexing adjustments. For example, in salary and compensation negotiations, because employees hope that salary (nominal) growth can be equal to or higher than the CPI, and hope that nominal salary will be automatically adjusted in line with the rise in the CPI. The timing of the adjustment is usually after inflation occurs, and the magnitude is lower than the actual inflation rate.
4. Reflecting changes in the purchasing power of money: The purchasing power of money refers to the amount of consumer goods and services that can be purchased per unit of money. Consumer price index rose, the purchasing power of money is down; the opposite is up. The inverse of the consumer price index is the purchasing power of money index.
5. Reflecting the impact on workers' real wages: an increase in the CPI means a decrease in real wages, and a decrease in the CPI means an increase in real wages. Therefore, the CPI can be used to convert nominal wages into real wages.
6. The impact of CPI on the stock market: In general, when prices rise, stock prices rise; when prices fall, stock prices fall.
CPI refers to whatCPI is the Consumer Price Index (ConsumerPriceIndex).
Consumer Price Index (CPI) is to reflect the price of products and services related to the lives of residents out of the price change indicators, usually as an important indicator to observe the level of inflation. China called the consumer price index. Consumer price index can be compiled according to urban and rural areas, respectively, urban consumer price index and rural consumer price index, can also be compiled according to the whole society of the national consumer price index.
In the United States constitute the index of the main commodities *** divided into seven categories, including: food, alcohol and beverages residential; clothing; transportation; medicine and health; entertainment; other goods and services.
In the United States, the Consumer Price Index (CPI) is published monthly by the Bureau of Labor Statistics and there are two different CPIs. One is the Consumer Price Index for Workers and Employees, or CPW, and the second is the Consumer Price Index for Urban Consumers, or CPIU.
Expanded:
CPI price index indicator is very important and revealing. Sometimes it is announced that when the indicator rises, the currency exchange rate is bullish, and sometimes the opposite is true. The consumer price index indicates the purchasing power of consumers and also reflects the state of economic prosperity. If the index falls, it reflects a recession, which is inevitably unfavorable for the currency exchange rate;
But if the consumer price index rises, it depends on the rate of increase in the consumer price index. If the index rises moderately, it indicates that the economy is stabilizing upwards, which is good for the country's currency;
But if the index rises too much, it has an adverse effect because the price index is inversely proportional to the purchasing power, and the more expensive the price, the lower the purchasing power of the currency, which is bound to be unfavorable for the country's currency. If you consider the impact on interest rates, the role of the index on the impact of foreign exchange rates is more complex.
Baidu Encyclopedia - Consumer Price Index
How is the CPI index calculated?CPI=Consumer Price Index, an acronym for ConsumerPriceIndex
CPI3% is inflation
CPI=(the value of a fixed set of goods at current prices/the value of a fixed set of goods at base period prices) x 100
Say, last year, popsicles were 1 dollar and this year they are selling for 1.2 dollars. (1.2 ÷ 1) * 100% = 120% That is, the price index for popsicles rose 20%. The reality is to take a large number of consumer goods to arrive at the price compared to last year or the previous quarter to arrive at.
The eight categories of goods that make up the CPI are: food, housing, tobacco, alcohol and supplies, clothing, transportation and communications, health care and personal goods, household equipment and maintenance services, recreation, sports and cultural goods and services
What is the CPI?The Consumer Price Index, abbreviated as the CPIcpi index, is cpi index is an indicator of price changes based on the prices of products and services related to the lives of residents cpi index, and is usually used as an important indicator to observe the level of inflation. From January 2011 cpi index, China's CPI began to calculate the 2010 as the base period for the comparison of the price index series. CPI = (the value of a group of fixed commodities at current prices / the value of a group of fixed commodities at the prices of the base period) × 100%. If the average household in a country spent $800 per month on a set of goods in 1995 and $1,000 per month on that set of goods in 2000, then the country's consumer price index for 2000 is (with 1995 as the base period) CPI = 1000/800 × 100% = 125%, which means a rise of (125-100)% = 25%. But it has regional variability.
Proportions of CPI components cpi index: food 34% recreation education and cultural services 14% housing 13% transportation and communication 10% health care 10% clothing 9% household equipment and maintenance 6% tobacco and alcohol 4%;