Some however would argue that there has been deflation, or at least disinflation, in several sectors such as apparel. The rise of fast fashion and
Some however would argue that there has been deflation, or at least disinflation, in several sectors such as apparel. The rise of "fast fashion" and global competition could be factors in the stagnation of apparel prices that has occurred. What do you think? What about incorporating the quality of the product into the measurement of the price? Do you see some of the issues that could come up in using and calculating economic data?
First, use the CPI to measure the rate of inflation between January and February of 2016.What percent inflation did you find? Now do the same thing for January and February of 1985. If you look at a long term graph of the inflation rate in the U.S. you will see quite a bit of variability, although much less than for some other nations where moderate inflation is a common experience. In later modules we will return to discussing inflation, the monetary authority of the U.S., and the relationship between inflation and unemployment.
Finally, for now, let's consider the effect of even a low rate of inflation, such as found in the U.S., on the purchasing power of income over long periods of time. Suppose that in January 1990 someone began a job paying $50,000 per year. Using the CPI tables,find what that job would have to pay in January 2020 to afford the same purchasing power.
