Consumer Price Index (CPI) characterizes the change over time in the general level of prices for goods and services purchased by the population for non-productive consumption. The CPI is one of the most important indicators characterizing the standard of living of the population.

The CPI applies:

to assess changes in the cost of living and the level of inflation in the country;

to revise government social programs (the basis for increasing the minimum wage, indexing the cost of living, indexing the minimum pension, justifying subsidies and price subsidies that do not allow a decrease in the level of population consumption of essential goods and services);

in determining state policy in the field of finance, regulating the real exchange rate of the national currency, analyzing and forecasting price processes;

for recalculation of indicators of the system of national accounts from current to comparable prices.

The CPI measures the change in the value of a fixed set of goods and services in the current period compared to its value in the previous (base) period.

The “basket” of basic consumer goods and services is fixed so that changes in the CPI cause only changes in prices and not changes in consumption patterns resulting from changes in income or the purchase of other goods. Therefore, the CPI is also called the cost of living index.

The consumer set for calculating the CPI consists of three large groups:

Foodstuffs,

Non-food products,

paid services provided to the population.

To calculate the CPI, the formula is used Laspeyres price index, but not an aggregate form, but a weighted arithmetic average of individual price indices, calculated based on indicators of the cost structure. The weight is the share of consumer expenditures of the population on a certain representative product.

The Laspeyres price formula is transformed as follows:

,

where Q 0 is the cost of an individual product in the consumer “basket” of the base period;

- the share of household expenditures on a specific j-th product in the total volume of consumer expenditures in the base period;

- individual basic price index for the j-th representative product,

, - average prices of goods, respectively, for the current and base periods. They are calculated as simple arithmetic averages of prices recorded at selected reference outlets:

,

where M is the number of retail outlets.

Index shows, by how many times (or by what percentage) consumer spending would change in the current period compared to the previous one if the level of consumption remained the same when prices changed.

The formula with individual basis indices is difficult to use because... Over long periods of time, the range of goods sold changes, goods are replaced, and the structure of commodity flows changes. Therefore, the individual basic price index is calculated as the product of chain individual price indices:

The use of chain price comparisons facilitates the introduction of new products or their substitution when the need arises.

The calculation of the consolidated CPI is carried out on a monthly, quarterly basis, as well as on an accrual basis for the period from the beginning of the year. The CPI is calculated monthly for the previous month of the current year and for the corresponding month of the previous year, as well as on a cumulative basis from the beginning of the year to the corresponding period of the previous year. The calculation of price indices for a quarter, half-year, period from the beginning of the year is carried out using the chain method, i.e. by multiplying monthly consumer price indices.

Statistics show that the use of the Laspeyres formula tends to overestimate the actual price change. Thus, if prices for some consumer goods increase relative to other goods, then consumers reduce spending on these goods. By replacing more expensive goods with some cheaper ones, consumers can buy a set of goods and services that is adequate to the previous one, but it will cost them less than it would have cost them to buy the previous set at the new prices.

The consumer price index calculated using this formula does not take into account qualitative changes. If the quality of goods and services improves, their prices should also increase. However, it is assumed that the entire increase in the monetary value of the consumer “basket” is entirely caused by inflation, and not by an improvement in the quality characteristics of goods and services. Consequently, calculations based on a fixed set are correct only for a short period of time, if during this time there are no significant quantitative and qualitative changes in the structure of consumer spending. Under these conditions, the CPI will adequately reflect changes in the cost of living.

The consumer price index using the modified Laspeyres formula is calculated at the regional and federal levels.

The consolidated price index for Russia is calculated as a weighted average of regional indices, the weight being the share of the population of the corresponding region in the total population:

,

Where - consumer price index in the k-th region;

- the share of the number of the k-th region in the total population of Russia.

Money Purchasing Power Index calculated as the reciprocal of the CPI:

Its value shows the relative change in the purchasing power of money in the hands of the population.

Various price dynamics indicators— producer price indices, gross domestic product deflator, consumer price index. When people talk about inflation, they usually mean the consumer price index (CPI), which measures the change over time in the cost of a set of food, non-food goods and services consumed by the average household (i.e., the cost of the “consumer basket”). The choice of the CPI as the main indicator of inflation is associated with its role as an important indicator of the dynamics of the cost of living of the population. In addition, the CPI has a number of characteristics that make it convenient for widespread use - simplicity and clarity of the construction methodology, monthly calculation frequency, and prompt publication.

The periods over which the CPI is measured may vary. The most common comparisons of the level of consumer prices in a certain month of the year with their level in the previous month, the corresponding month of the previous year, December of the previous year.

Statistical monitoring of prices, necessary calculations and publication of data on the CPI in Russia is carried out by the Federal State Statistics Service.

Features of the Russian consumer basket

In Russia, as in countries with emerging markets in general, a characteristic feature of the consumer basket is a fairly high share of food products in it (36.5% in 2014). Their prices are quite variable. To a large extent, fluctuations in inflation in the food market are determined by changes in supply volumes, primarily the crop yield in our country and in the world, which significantly depends on weather conditions. Since the share of food products in the consumer basket is high, fluctuations in their prices can have a significant impact on inflation as a whole.

Another feature of the Russian consumer basket used to calculate the CPI is the presence of goods and services in it, the prices and tariffs of which are subject to administrative influence. Thus, the state regulates tariffs for a number of public utility services, passenger transport, communications, and some others. In addition, prices for tobacco products and alcoholic beverages significantly depend on excise tax rates.

Consumer demand is satisfied through goods and services of both domestic and foreign origin. There are no statistical data on the share of imports in the CPI, but the share of imports in the structure of retail trade commodity resources can give an idea of ​​it in terms of goods (in recent years - about 44%). The significant share of merchandise imports in the consumer basket determines the significant impact of changes in the ruble exchange rate on inflation.

Inflation factors

Prices may rise faster or slower. In the first case, they talk about an increase in inflation, in the second - about its decrease. There are various reasons for changes in inflation. Let's look at them using the example of accelerating price growth. If the level of demand for goods and services exceeds the ability of supply to satisfy it, they speak of a pro-inflationary effect demand side factors. In some cases, the rapid growth of demand may be affected by too accessible loans and accelerated growth of nominal incomes of economic entities. Often these sources of excess demand are called "monetary factors of inflation"- pressure on prices due to the creation of excess money.

Inflation can also rise when an imbalance in the market for a product or service arises due to insufficient offers, for example, due to crop failure, restrictions on the import of products from abroad, or the actions of a monopolist.

Inflation can be caused by growth costs for the production and sale of a unit of product - due to rising prices for raw materials, materials, components, increased enterprise costs for wages, taxes, interest payments and other costs. Increasing costs can also lead to a decrease in production volumes and, further, to the formation of additional pro-inflationary pressure due to insufficient supply.

An increase in prices for imported cost components may be due to both an increase in world prices and a depreciation of the national currency. In addition, the weakening of the national currency can directly affect the prices of final products imported from abroad. The overall effect of a change in the exchange rate on price movements is called "carryover effect" and is often considered as a separate factor of inflation.

Economic theory identifies as a special factor inflation expectations— assumptions regarding the level of future inflation, formed by economic entities. The expected rate of inflation is taken into account by producers when making decisions regarding setting prices for their own products, wage rates, determining production volumes and investments. Households' inflation expectations influence their decisions about how much of the funds at their disposal to allocate to savings and how much to consumption. The decisions of economic actors affect the supply and demand of goods and services and, ultimately, inflation.

Negative consequences of high inflation

High inflation means a decrease in the purchasing power of the income of all economic entities, which negatively affects demand, economic growth, the standard of living of the population, and public sentiment. Depreciation of income reduces opportunities and undermines incentives to save, which prevents the formation of a stable financial basis for investment. In addition, high inflation is accompanied by increased uncertainty, which makes it difficult for economic actors to make decisions. All together, this negatively affects savings, consumption, production, investment and, in general, the conditions for sustainable economic development.

Benefits of Price Stability

Price stability means maintaining low growth rates in consumer prices, which economic actors neglect when making decisions. In conditions of low and predictable inflation, the population is not afraid to save in national currency for long periods, since they are confident that inflation will not depreciate their deposits. Long-term savings, in turn, are a source of financing investments. In conditions of price stability, banks are ready to provide resources to borrowers for long periods at relatively low rates. Thus, price stability creates conditions for increased investment and, ultimately, for sustainable economic development.

Assessing the growth in the well-being of a country's population is not an easy task. Citizens' incomes are growing, but at the same time prices are rising. Which country can boast of higher income growth - Russia, or, say, Switzerland?

To answer this and many other questions, economists and statisticians use the so-called. The consumer price index is one of the most important economic indicators that assesses the level of inflation in a country for a certain period. It is sometimes called the inflation index. Using this indicator in calculations, you can find out how much richer or poorer the residents of a particular country or region actually became over a certain period of time.

Consumer price index for 2018 Rosstat official website

In Russia, the CPI values ​​by year, month and by region are published on the official website of Rosstat of the Russian Federation. Currently, statistics have been kept since 1991. These data can be used to estimate how much the final prices of goods from the consumer basket in the current period differ from the cost of the same goods in an earlier (base) period.

The growth formula is calculated using what?

CPI (Consumer Price Index, CPI) is calculated as the ratio of the cost of goods and services in the billing period to the prices for the same goods and services in the base period, taking into account the share of these goods and services in the consumer basket, or the so-called. Laspeyres formula.

Usually, when calculating, the cost of the consumer basket in an annual period is taken as the base value, for example: in September 2015 - for September 2014, in October 2015 - for October 2014, in November 2015 - for November 2014. , etc. However, depending on the application, this indicator can also be calculated to the level of December of the previous year and (for macroeconomic studies and long-term planning) to the price level of years and even decades in the past.

The value, to some extent the inverse of the CPI, is called the GDP deflator, or the Pasche index (Paasche). It is also used to estimate the level of inflation and is defined as the ratio of the GDP of the calculation period as a percentage to the GDP of the base period. It's not the same thing. Unlike the inflation index, the deflator is not based on the value of the consumer basket, but on GDP as a whole; When calculating the CPI, the cost of imported goods is taken into account, but the GDP deflator is not.

In addition, a third approach can also be applied - the Fisher formula, something between the CPI and the GDP deflator, but now it is rarely used (how the indicator is calculated using this complex formula - Wikipedia will help).

What does it show and what can it be used for?

The indicator calculated using the Laspeyres formula shows how the cost of goods and services included in the consumer basket has changed in relation to the base period. If it is more than one (100%), then there is an increase in prices (inflation); if it is less, there is a decrease (deflation). So why is this indicator needed?

The CPI allows you to adjust the final income of the population for a period to the general price level and show how much the real income of the population has grown or fallen, i.e. We have become richer or poorer, and by how much. It influences interest rates and rates on the stock and bond markets, and is used by the Ministry of Economic Development to index public sector salaries, pensions and benefits.

The projected average annual inflation rate is taken into account when developing the budget for the next year. Labor productivity in the economy is also measured taking into account price level dynamics. The Central Bank of the Russian Federation uses the inflation rate forecast to calculate the average annual exchange rate against the ruble, so the CPI has a great influence on forex trading. How does this coefficient affect exchange rates? High inflation indicates the low purchasing power of the ruble, i.e. The higher the projected CPI, the weaker the national currency exchange rate today.

Consumer price growth index for 2018 Rosstat official website

The value of the indicator for the Russian Federation for 2017 was 112.9%. Based on reports by region of the Russian Federation published by the Federal State Statistics Service on its website, the difference in inflation by region was insignificant.

Thus, Moscow showed an increase in the cost of living at 114.1% in 2017, in St. Petersburg the index increased compared to the previous year to 113.2%, in the Nizhny Novgorod region - 112.2%, in the Rostov region - 112.1 %, in Samara - 112.7%, in Chelyabinsk - 112.0%, in Altai Territory - 112.4%, in Krasnodar Territory - 112.7%. The Volgograd region showed an increase of 113.2%, Yaroslavl - 113.9%. The highest inflation was recorded in the Republic of Crimea - 27.6%,

In terms of product groups, the indicator also fluctuated slightly last year and amounted to:

• For food products - 114.0%;
• For non-food products – 113.7%;
• For services – 110.2%.

Price growth in the first two months of 2017 was 1.6%, which means an average monthly increase of 0.8%, or 9.6% year on year. There are several resources on the Internet that offer a very convenient calculator for calculating the inflation index for different periods.

Basic form: what is taken into account

The consumer basket used by Rosstat to calculate the inflation rate, in contrast to the minimum basket, includes a wide range of goods and services (396 items in total), including such unusual ones as foreign tourist trips and funeral services. The main problem in calculating the indicator is how to determine the basic set of products and services included in the consumer basket. How to calculate the value of an indicator for a product or service that did not exist yesterday? How to apply in calculations the data that a particular product or service occupies a large share of expenses in one social group or region, and a minimal one in another? The inflation index underestimates structural shifts in consumption (the effect of replacing expensive goods with cheap ones) and ignores variations in the cost of goods depending on their quality, so real inflation is considered to be lower than the value of this indicator.

Inflation: forecast for 2018

The Federal Budget Law for 2018 provides for an inflation rate of 6.4%, and this is with an average cost of a barrel of oil of around $50. It is already clear that the price of oil will be below this level, and inflation in Russia will be higher, which will affect the consumer price index. Representatives of the Central Bank of the Russian Federation believe that this figure at the end of the year will be around 7 percent.

The head of the Ministry of Economic Development A. Ulyukaev has already given different figures since the beginning of the year, and based on the latest statements, the department expects price growth in 2018 to be less than 8%. The UN estimates the possible rise in living costs in Russia at 10.5%. The actual value will most likely be around the average of these forecasts.

Consumer price indices for 2018 Rosstat

According to Rosstat, based on the results of the first two months of 2018, the CPI in annual terms amounted to 109.8% in January, 108.1% in February, and 101.6% in February compared to December 2017. The dynamics of the indicator values ​​gives reason to believe that the annual value will be in the region of 7.5 - 9%%. However, analysis of such a short horizon is unlikely to be useful in a practical sense, since the data taken is too superficial.

Ratio of final income of the population

According to the forecast for 2016-2018, published by the government at the end of 2015, the final income of the population, adjusted for inflation, will continue to decline in 2016 and will decrease by 0.7% compared to 2015. The reasons are a reduction in budget expenditures at all levels for wages and social benefits. However, the inflation rates included in this forecast are lower than the actual ones, which means that real incomes of the population will most likely decrease by several percent in 2018, which is directly related to how this will interact with the consumer price index.

How has the situation changed in foreign countries?

The annualized inflation rate for February 2017 in Russia and some foreign countries was:

• Belarus 12.80;
• Brazil 10.36;
• Germany 0.00;
• Greece -0.52;
• Spain -0.84;
• Kazakhstan 15.11;
• Canada 1.36;
• Mexico 2.87;
• Russia 8.06;
• USA 1.02;
• Ukraine 32.66;
• France -0.19;
• China 2.30.

Based on the data in the table, we can conclude that prices are stable over the medium term in the main economies of the world (China, USA, Eurozone countries), and in some places there is even deflation.

On the contrary, the highest rates of price growth are in countries that have experienced or are experiencing periods of political instability or falling energy costs (Ukraine, Belarus, Kazakhstan, Brazil, Russia).

Considering that the Minsk authorities are very likely to exert some pressure on Belstat, statistics for Belarus do not reflect the real state of affairs regarding the consumer price index.

Consumer Price Index (CPI - Consumer Price Index) - an indicator of rising prices for goods and services.

This is the most popular formula for determining inflation/deflation. The CPI is a weighted average of the prices of goods and services purchased by the average household.

When determining CPI, the so-called statistical shopping basket is taken into account. Its content is determined by the statistics department and approved at the state level. The consumer price index is calculated using the formula:

• Kr is the cost of the market basket for a certain year;
• Kb is the value of the market basket at the time of calculation.

The Consumer Price Index is measured in almost every country, but the calculation methods differ. In poor countries, residents spend a significant portion of their income on food, and this has a significant impact on the CPI. On the contrary, in highly developed countries, differences in consumption patterns lead to the need to develop their own calculation scheme. For example, in the Japanese price index, fish is weighted more heavily, while in the French price index, wine consumption is weighted more heavily.

Basket contents

The basket consists of various product groups, which cover about 400 items. It represents the shopping mix of a typical consumer. The list includes food, fuel, clothing, real estate, fees for medical and legal services, expenses for public transport, repairs, interest on loans, etc.

The consumer price index is very important for the economy. It appears as:

• inflation rate;
• a measure of the purchasing power of money;
• part of the formula for calculating wage indexation (cost of living adjustments);
• indicator for coordinating monetary and fiscal policies.

The price index for consumer goods and services is one of the most important indicators of fundamental (macroeconomic) analysis. In monetary policy, it is used by countries in which the central bank uses a direct inflation targeting strategy. There are also other indicators that determine price stability in the economy, for example, the gross product deflator. However, from the studies conducted it follows that the CPI more fully diagnoses inflation compared to other calculation methods.

Problems detecting changes in CPI

To more accurately calculate the CPI, the following factors should be taken into account when calculating:

• The emergence of new products. This means more choice for consumers. Greater variety of products increases the value of money. This means that people need less financial resources to maintain their current standard of living. However, the price index is based on a fixed basket of goods and services, so it does not reflect changes in the purchasing power of money.
• Substitution of goods. Product prices vary to varying degrees. Some decline more, others decrease, and others increase. Consumer demand due to such price elasticity may vary, as the buyer limits the purchase of goods that have become more expensive and increases the purchase of cheaper items. If the CPI is calculated for a fixed basket, it does not take into account the fact that consumers may buy substitute goods.
• No change in quality. Deterioration in the quality of goods leads to a fall in the purchasing power of money, even if the price of the product has not changed. Likewise, as a product improves, the cost of finance increases.

Another challenge in calculating the CPI is making comparisons over the long term. The problem stems from the fact that many goods and services present in the current basket did not exist in the past (for example, microwave ovens, mobile phones, etc.). Some product items (for example, computers) are included in the list, but the statistics do not take into account that the equipment currently produced is different from its previous generations, which may affect its cost. Also, the accuracy of calculations can be affected by the so-called inflation inequality - the difference in the share of individual goods and services in the structure of expenses of different social groups.

When looking at utility bills and store price tags, many people ask, “If everything is getting so expensive, then why are we being told that the consumer price index has not increased much? Who calculates the consumer price index (CPI) and how?” In order to answer this question, let's try to figure out what the consumer price index is and why it is needed.

In economic theory, the consumer price index is a tool for measuring inflation, which characterizes the increase (decrease) in prices based on changes in the price of goods and services in the so-called consumer basket. The CPI indicator (in foreign literature CPI - Consumer Price Index) is used all over the world and serves to measure inflation and the standard of living of the population.

Calculation of consumer price index

The calculation formula for the consumer price index (as a percentage) is very simple. It is the sum of the products of the prices of goods (services) - C, by their share in the consumer basket. The numerator uses data from the period under study, and the denominator uses data taken as the base. Thus, the consumer price index is calculated as the increase in price (decrease in price) of basic goods and services in relation to the base period, expressed as a percentage.

CPI = (Ts1V1+Ts2V2+…+TsnVn)*100/(Ts1’ V1’+Ts2’V2’+…+Tsn’Vn’)

As you can see, to make the calculation you need to know the prices and composition of the consumer basket.

What is a consumer basket

Since different goods and services occupy different shares, a rise in price, for example, doubling the cost of electricity, will have a slight impact on the cost of the basket as a whole. So, if the payment for electricity is 1% of the total cost of products and services in the consumer basket, then an increase in its cost by 2 times (i.e. by 100%) will increase the CPI by only 1%. But if the share of electricity in the “basket” is 5%, then the increase in cost will be already 5%!

Read also: Full cost of the loan: what is it, how to calculate

Therefore, to understand how the consumer price index reflects the situation on the market, and, consequently, our purchasing power and standard of living, you need to know what the consumer basket is. In very general terms, it is the set of goods and services consumed by a person (or an average family) over the course of a month or year. The consumer price index in the Russian Federation is calculated on the basis of such a set, which is regularly reviewed and approved by the government. Why should this be done regularly? The answer is very simple - our needs are not static, but change over time.

A simple example. Thirty years ago, including cellular communication services in the basket was impossible (it simply did not exist then), but today these services are an essential item. The definition of qualitative and quantitative content is the difficulty and weak point that causes fair criticism from us. This is where the dog is buried. The basket is average, and we are all different.

In order to understand how the CPI indicator is related to the standard of living of various segments of the population, let’s consider several recent examples from the situation in Russia. The CPI in December 2016 was 105.4% compared to December 2015, and in December 2015 compared to December 2014 – 112.8%. That is, over two years the CPI amounted to 118.9%. If you now ask a wealthy person who consumes mainly imported goods, which rise in price approximately in proportion to the depreciation of the ruble, he will say that the rise in price is significantly greater. People with low and middle incomes primarily evaluate utility bills.