Inflation is generally regarded as not a good thing for an economy. When prices increase, consumers pay more for goods and services. It also becomes more difficult to predict costs in the future. Companies are not sure what prices to set, employees are not sure what wages to request, and banks are not sure what interest rates to put on loans.
Almost every country in the world employs an economic bureau to monitor changes in the level of prices. In the United States the Bureau of Labor Statistics creates a monthly consumer price index (CPI). The CPI is the percentage change in consumer goods and services purchased by urban households. Most recently, the U.S. inflation rate has been about 1.5 to 2.0%.
In Europe, it is common practice to look at the Harmonised Index of Consumer Prices (HICP). It is a collection of monthly prices in the European Union. In Asia, much of the attention is focused on China’s National Bureau of Statistics (CCPI). In Latin America and other countries, individual central banks or government agencies issue price level reports in either quarterly or monthly releases.
One limitation of inflation indexes is the lack of transparency, often limited to general categories of food, clothing, and shelter. In the end, it is the price increases in your own purchased goods and services that really matter. To make your financial decisions, you need your own real rate of inflation. On HuMuch (http://humuch.com), you can create a personalized basket of goods and services and create personalized inflation rates and cost of living comparisons. It’s free. We invite you to check out HuMuch, the place to find, share and compare prices around the world.