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How is Inflation Rate Determined by a Country?

This question was recently posted.

how inflation rate of any country is determined?
i mean which yardstick is used to measure inflation?

looking forward to quick response

thanks in advance

A. By a number of factors really, that’s a pretty open-ended question 😛

Essentially in the US and Canada the CPI index is used to help determine movements in inflation. CPI = consumer price index and measures the ‘cost’ of select goods. Generally, everything is included in the CPI index. However, there are other things that can influence inflation (which [inflation] is a measure of price movements of goods).

I.E. you may watch the housing market to get an indication of inflation…. high gas prices may be an indication that inflation (the overall cost of goods) will increase.

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