Measuring Inflation
Вставка
- Опубліковано 23 лип 2024
- Inflation is common in a modern economy. Shifts in supply and demand for goods and services cause prices to change accordingly. When the average level of prices rises, that’s inflation. It means that you’ll need more money to purchase the same stuff.
Inflation in the United States can be measured using the Bureau of Labor Statistics’ Consumer Price Index (CPI) - a weighted average of the price increases. We can calculate the inflation rate by the percentage change in the CPI over a given period of time.
How much do prices actually change? Well, using FRED, we can see that, over the past thirty-three years, prices have more than doubled. That may seem like a lot. However, wages have also risen, on average, by more than prices during that time period. Inflation doesn’t necessarily mean that we’re worse off.
The inflation rate in the United States has averaged at about 2.5% per year since 1980, which is fairly low and indicative of a stable economy. Prices may be increasing, but the changes are small. Wages have time to catch up. You can be confident that the $5 in your pocket isn’t going to be worth drastically less in a year.
Let’s take a look at a different scenario -- one that’s playing in Venezuela right now. As the country faces an economic crisis, inflation is skyrocketing. Rates reached 180% in 2015 and have continued to rise since. 5 bolívar in your pocket could be worth less even by the end of the day.
But Venezuela still doesn’t compare to the hyperinflation that Zimbabwe experienced in the 2000s, reaching dizzying rates of billions of a percent per month. (See MRU’s previous video for more!)
While some inflation is perfectly normal, high rates of inflation make it difficult for consumers to use a nation’s currency. If the value is changing a lot by the week, day, or even minute, people don’t want to hold onto or accept the currency for goods and services -- leading to a full blown currency crisis.
Up next, we’ll take a deeper dive into what causes inflation and its consequences.
Subscribe for new videos: bit.ly/1Rib5V8
Macroeconomics Course: bit.ly/1R1PL5x
Interactive practice questions: mru.io/5d9
Next video: bit.ly/2jcmoUH
Test yourself with our interactive practice questions: mru.io/o9n
Im from Zimbabwe, once a trillionare😂😂
How was it? Were you able to buy food with it? I am really curious
Nice video, although I would like to comment one thing. On average, wages have gone up, yes. But the inflation adjusted wages of the lower percentiles (25th, to a lesser extent even up to 50th) have stayed quite stagnant since the 70's, hence the risen income inequality. In simpler words: richer half of the US can agree 100% with the video. Poorer half may say "lol my ages haven't gone up" and be correct. So, on average wages have gone up, but for the poorer half they've stayed about the same (inflation-adjusted).
That really should have been explained in the vid.
yeah I found that comment immensely misleading; any working economist will be well aware that real wages have stagnated since the '70s
@@carstereobandits Also should have explained the CPI is a complete lie to begin with, and is a way to tinker the stats to create a palatable number for inflation.
@@carstereobandits ya instead he just looked at the camera for a second pretentiously. I could feel myself being called a moron :(
@@Jennifer-wr9si Supply and demand would have driven wage changes
This is my best channel. I learned alot from you videos. 100% better than my university. I respect you and salute.✋
"Inflation is when the average price goes up, Inflation is when the elevator goes up" - did I hear that correctly?
Same I'm confused too
ua-cam.com/video/FckXnTxjfWg/v-deo.html
Inflation rate is void
@@shubhangiroltha2578 average price increased means elevator goes up
Prices are random in a box, the box goes up causing the prices to be random in the much higher tier, i.e. higher prices
Hey, great videos! Thanks so much for your work =)
So the inflation rate is the rate of change of the consumer price index? Like the derivative or slope of prices?
Thank you for supporting the knowledge and the philosophy of economics
@1:43 You can see that particular chart if you go to Edit Graph and select CPI for all urban consumers from the dropdown.
And how does PPI and Gab deflation factor in to the measurement of inflation?
I wish you were my teacher back when I was still in school.
4:11 venezuela: zimbabwe hold my beer!!
😂😂
Is it a problem that the "basket of goods" is constantly changing?
very helpful, thanks!! 😅
incredible video !!!
INCREDIBLE VIDEO
@@serenak3012 INCREDIBLE
Love this! Though I'm not an economist I'm learning!
instablaster...
Incredible video.
you guys are amazing
Amazing video!
BRILLIANT!
hmm... wages have gone up on average by more than prices?... so are we averaging the ridiculous amount of money "earned" by the 1% along with all the myriad barely-scraping-by incomes of so many others in this country?
@Marginal Revolution University - can you do a video discussing the potential relationship between Universal Basic Income and Inflation?
very nice
Zimbabwe is going back to that situation
What did the elevator represent tho
The video sound is pretty good, beyond my imagination
Awesome
2:26 no they have not, we are in a period of stagflation.
We are talking about pre-inflation numbers, watch the video and turn on your comprehension skill
That's not what stagflation means... Stagflation = high unemployment + inflation. You can have low productivity/wage growth and not have stagflation
Let's compare to..... Venezuela!!!?
CPI is not a good measure for inflation. Those data are not correct and not available for public to validate. In 2021 housing is up 15%, Car price up 20%, Grocery up 20%, food at restaurant is more expensive, Cost of living is up in every city, Stocks is up, bitcoin is up, gold is up, gas is up; then fed reports 2% inflation. Average inflation in the US has been around 10% and much higher this year. Affordability and real GDP per person is falling for decades. That's why, every other country seems to be catching up to the US economy.
:)..economics never changes, it just gets more mathematical when you want to get a masters or phd
I know a "Principles" video is not the place to discuss it, so I don't fault you, but people should be aware that after the Reagan admnistration, much of the drop in inflation can actually be attribited to changes in CPI reporting/weighting practices - the real rate of inflation in being disguised and misreported.
wages up? lol
please drop subtittle in the bellow of video
on the caption
It only measure standard basket of all the essentials and not the everything but it must include number of smiles and number of tears otherwise it mean nothing if rich while people crying and bleeding and eat noodle as happiness
who here is from econ? rosenberg whats good
Top 3 inflation cases (Zimbabwe is my home country):
1. Hungary (1946) __prices took 5-9 hrs to double
2.Zimbabwe (2008) __15hrs to double
3. Germany (1923)____24hrs to double
oh fuck this helps so much
And venezuela inflated this year
Wow. This didn't age well. Now I understand. This is really bad.
Yes wages increased for some (trickle down) 2,000% to 10,000% and more in some cases, whilst same time rise of 'working poor : Invisible America' (David K Shipler), doing multiple casual low-income subsistence work. Ergo Trump cancelling TPP negotiations, to add that was not included, realising that this expedited short video is not wanting to discombobulate those wanting to know economics. Is that not fudging the figures, that gave rise to Donald J Trump? In full view of the world, is my two bob worth, in these money is root of all happiness times.
Who is watching it now
2:55 / 5:22
I love inflation
MCOD1999 there is types of inflation buddy which one you like.?
Riya Vanishqswertuasdf
MCOD1999 mugabe? Is that you?
This video did not age well in 2022
.
This video is boring as hell. The previous on Zimbabwe inflation was more edu entertaintional
edu entertaintional 😂 are you drunk tiger?
Im disliking your video because you use google