How to use inflation to calculate purchasing power
Publish: 2021-05-02 14:19:53
1. The nth power of 1000 / (1 + B-A)
2. For example: suppose that the inflation rate is 3%, that is to say, RMB 10000 should have been issued, but RMB 10300 was actually issued. The currency symbol is not equal to the supply and demand of equivalent procts. At this time, RMB 10000 is only equivalent to the original purchasing power of RMB 10000 / 10300 * 10000 = 9708.737864
3. Inflation rate = (CPI in the reporting period - CPI in the base period) / CPI in the base period * 100%
then the results can be obtained by applying the published data according to this formula
then the results can be obtained by applying the published data according to this formula
4. In a broad sense, it is an inverse relationship. Inflation means low purchasing power
because the problem is too simple, I don't know how to organize 500 words to explain the problem. Maybe my knowledge is more simple, and I don't know it's a complex problem at all. Then I'll use my simple knowledge to talk nonsense
1. Inflation also depends on the nature of inflation. Generally, the healthy development of social economy is accompanied by benign inflation. For example, deposits need to give you interest, investment needs to be profitable, instries need to have liquidity support, wages need to rise, society graally becomes rich, and procts need corresponding currency. Let's call it organic inflation or benign inflation for the time being. In an ideal state, the money supply of the whole society will naturally increase at this time. Because of the organic driving force, the prices will also rise. At the same time, your income will increase, and the purchasing power of money exchanged by your labor force of the same unit will beat the price rise. Of course, broadly speaking, the purchasing power of money in the same unit has decreased< In general, there are always interest groups and the masses in a country, and their interests are in conflict in a narrow sense. This is mainly reflected in the fact that some people enjoy their success while most people have to work hard. This is doomed to be difficult to achieve all kinds of ideal state, or the ideal state is difficult to last. In essence, one of the means for interest groups to enjoy their success is to deprive the public of the surplus value of labor by controlling the initiative of money supply, which is ultimately reflected in inflation. I'm not going to go deep here. Let's talk a little bit gently, such as the high housing prices promoted by local governments and the no anchor money printing by the central bank. This will push the economy as a whole towards inflation. There is no solution to this problem in the foreseeable time range of the world, which rises to the problem of social system. This is especially true of the monetary policy of the Federal Reserve, because the global monetary nature of the US dollar has risen to the problems between countries, the United States and the world
3. Because of the second reason, which is also why most of a society's economy will not maintain an ideal balance between inflation and purchasing power. If inflation and your income lose balance and break through the critical point, it will slide into vicious inflation if it is not controlled, As a result, the purchasing power of money and the purchasing power of unit money obtained by your indivial labor force decrease at the same time. Of course, a government or a currency must maintain its legitimacy and credibility, so most of the time it is in a sudden but unbreakable range. That is to say, no matter who is leading or who is reluctant, everyone can accept it.
because the problem is too simple, I don't know how to organize 500 words to explain the problem. Maybe my knowledge is more simple, and I don't know it's a complex problem at all. Then I'll use my simple knowledge to talk nonsense
1. Inflation also depends on the nature of inflation. Generally, the healthy development of social economy is accompanied by benign inflation. For example, deposits need to give you interest, investment needs to be profitable, instries need to have liquidity support, wages need to rise, society graally becomes rich, and procts need corresponding currency. Let's call it organic inflation or benign inflation for the time being. In an ideal state, the money supply of the whole society will naturally increase at this time. Because of the organic driving force, the prices will also rise. At the same time, your income will increase, and the purchasing power of money exchanged by your labor force of the same unit will beat the price rise. Of course, broadly speaking, the purchasing power of money in the same unit has decreased< In general, there are always interest groups and the masses in a country, and their interests are in conflict in a narrow sense. This is mainly reflected in the fact that some people enjoy their success while most people have to work hard. This is doomed to be difficult to achieve all kinds of ideal state, or the ideal state is difficult to last. In essence, one of the means for interest groups to enjoy their success is to deprive the public of the surplus value of labor by controlling the initiative of money supply, which is ultimately reflected in inflation. I'm not going to go deep here. Let's talk a little bit gently, such as the high housing prices promoted by local governments and the no anchor money printing by the central bank. This will push the economy as a whole towards inflation. There is no solution to this problem in the foreseeable time range of the world, which rises to the problem of social system. This is especially true of the monetary policy of the Federal Reserve, because the global monetary nature of the US dollar has risen to the problems between countries, the United States and the world
3. Because of the second reason, which is also why most of a society's economy will not maintain an ideal balance between inflation and purchasing power. If inflation and your income lose balance and break through the critical point, it will slide into vicious inflation if it is not controlled, As a result, the purchasing power of money and the purchasing power of unit money obtained by your indivial labor force decrease at the same time. Of course, a government or a currency must maintain its legitimacy and credibility, so most of the time it is in a sudden but unbreakable range. That is to say, no matter who is leading or who is reluctant, everyone can accept it.
5. I'm a scum of science. It's hard to calculate!
6. It depends on which aspect of inflation you mainly measure. If we mainly measure the residents, we use CPI as the inflation rate, and if we measure the procers, we generally use PPI as the inflation rate.
7. Inflation rate = (current price level - base price level) / base price level
the base period is to select the price level of a certain year as a reference, so that the price level of other periods can be compared with the base period level to measure the current inflation level. In fact, the above is just one of the three methods to measure the level of inflation, but it is the most commonly used. In addition, there are GDP discount algorithm and proction index discount algorithm
since the 1970s, with the floating exchange rate replacing the fixed exchange rate, the impact of inflation on exchange rate changes has become more important. Inflation means the rise of the domestic price level. When the prices of most goods and services in an economy generally rise for a period of time, it is said that the economy is experiencing inflation. Since price is the monetary expression of a country's commodity value, inflation also means that the value represented by the country's currency decreases. Under the condition that the domestic and foreign commodity markets are closely linked, generally, inflation and domestic price rise will cause the decrease of export commodities and the increase of import commodities, which will affect the supply and demand relationship in the foreign exchange market and lead to the fluctuation of the country's exchange rate. At the same time, the decline of a country's currency's internal value will certainly affect its external value, weaken its currency's credit status in the international market. People will expect that the exchange rate of the country's currency will tend to be weak e to inflation, and turn its currency into other currencies, which will lead to the decline of exchange rate. According to the law of one price and the theory of purchasing power parity, when the inflation rate of one country is higher than that of another country, the actual value of one country's currency is decreasing relative to that of another country, and the exchange rate of that country's currency will decline. On the contrary, it will rise
for example, before the 1990s, an important reason for the strong exchange rates of the yen and the former West German mark was that the inflation rates of the two countries were always very low. The inflation rate of Britain and Italy is often higher than the average level of other western countries, so the exchange rates of these two countries are in a downward trend.
the base period is to select the price level of a certain year as a reference, so that the price level of other periods can be compared with the base period level to measure the current inflation level. In fact, the above is just one of the three methods to measure the level of inflation, but it is the most commonly used. In addition, there are GDP discount algorithm and proction index discount algorithm
since the 1970s, with the floating exchange rate replacing the fixed exchange rate, the impact of inflation on exchange rate changes has become more important. Inflation means the rise of the domestic price level. When the prices of most goods and services in an economy generally rise for a period of time, it is said that the economy is experiencing inflation. Since price is the monetary expression of a country's commodity value, inflation also means that the value represented by the country's currency decreases. Under the condition that the domestic and foreign commodity markets are closely linked, generally, inflation and domestic price rise will cause the decrease of export commodities and the increase of import commodities, which will affect the supply and demand relationship in the foreign exchange market and lead to the fluctuation of the country's exchange rate. At the same time, the decline of a country's currency's internal value will certainly affect its external value, weaken its currency's credit status in the international market. People will expect that the exchange rate of the country's currency will tend to be weak e to inflation, and turn its currency into other currencies, which will lead to the decline of exchange rate. According to the law of one price and the theory of purchasing power parity, when the inflation rate of one country is higher than that of another country, the actual value of one country's currency is decreasing relative to that of another country, and the exchange rate of that country's currency will decline. On the contrary, it will rise
for example, before the 1990s, an important reason for the strong exchange rates of the yen and the former West German mark was that the inflation rates of the two countries were always very low. The inflation rate of Britain and Italy is often higher than the average level of other western countries, so the exchange rates of these two countries are in a downward trend.
8.
Calculation method of inflation rate:
1. Calculate through the change of price index: inflation rate (rate of price rise) = {(current price level - base price level) / base price level} (the rate of price rise is from low to high, based on the base price level). Note the above formula, inflation rate is not a price index, that is, it is not the rate of price rise, It's the rate of increase in the price index
2. The amount of money needed in circulation × 100%
inflation rate, also known as the rate of price change [1], is the ratio of the excess amount of money to the amount of money actually needed, which reflects the degree of inflation and currency depreciation. In economics, the inflation rate is: the rising range of the average price level (subject to inflation). If the size of the balloon is the price level, then the inflation rate is the inflation degree of the balloon. In other words, the inflation rate is the degree of decline in the purchasing power of money
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extended data:
inflation rate
important index
(1) procer price index (PPI)
procer price index is a price index to measure the goods sold by manufacturers and farmers to stores. It mainly reflects the price changes of means of proction, and is used to measure the cost price changes of various commodities in different proction stages
(2) consumer price index (CPI)consumer price index is a measure of the price of a fixed basket of consumer goods, which mainly reflects the price changes of goods and services paid by consumers. It is also a tool to measure the level of inflation, expressed in the form of percentage changes
(3) retail price index (RPI)refers to the price index of retail goods paid by cash or credit card. The U.S. Department of Commerce concts a monthly sample survey of retail goods across the country, including furniture, electrical appliances, supermarket procts, medicine, etc., but excluding consumption in various service instries. Car sales constitute the largest single component of retail sales, accounting for about 25% of the total
Many foreign exchange market analysts pay great attention to the changes of retail price index. The rapid development of social economy and the increase of personal consumption will lead to the rise of retail prices. If this index continues to rise, it may bring the pressure of rising inflation, which will make the government tighten the money supply and increase the interest rate, which will bring good support to the country's currency. As a result, the index is better and theoretically better than the country's currency9. "20320;" 21435;"30475;" 30475;"33021;" 19981;"33021;" 31639;
http://card.money.sohu.com/tools/html/CalcInflatOrInCom.htm
http://card.money.sohu.com/tools/html/CalcInflatOrInCom.htm
10. 1. Long term real annual interest rate = non default long-term bond interest rate - expected long-term inflation rate
so the expected long-term inflation rate = non default long-term bond interest rate - long-term real annual interest rate = 8% - 3% = 5%
2. He did not consider the inflation rate, if he did, he should use the real annual interest rate (3%) to calculate< If the real annual interest rate is 3% (using financial calculator or excel), he should deposit $416569 at the age of 65
calculated at the real annual interest rate of 3% (using financial calculator or excel), he should deposit $15503 per year before retirement
4. The above calculation does not consider the income tax, which will rece the interest income. The new effective annual interest rate is 8% * (1-15%) - 5% = 1.8%
accordingly, at a real annual interest rate of 1.8% (using a financial calculator or excel), he should deposit $466801 at the age of 65
calculated at the real annual interest rate of 1.8% (using financial calculator or excel), he should save $19598 per year before retirement
note: if this problem is calculated out of thin air, it will be very complicated and may be miscalculated.
so the expected long-term inflation rate = non default long-term bond interest rate - long-term real annual interest rate = 8% - 3% = 5%
2. He did not consider the inflation rate, if he did, he should use the real annual interest rate (3%) to calculate< If the real annual interest rate is 3% (using financial calculator or excel), he should deposit $416569 at the age of 65
calculated at the real annual interest rate of 3% (using financial calculator or excel), he should deposit $15503 per year before retirement
4. The above calculation does not consider the income tax, which will rece the interest income. The new effective annual interest rate is 8% * (1-15%) - 5% = 1.8%
accordingly, at a real annual interest rate of 1.8% (using a financial calculator or excel), he should deposit $466801 at the age of 65
calculated at the real annual interest rate of 1.8% (using financial calculator or excel), he should save $19598 per year before retirement
note: if this problem is calculated out of thin air, it will be very complicated and may be miscalculated.
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