Economical Analysis of Consumer Price Index in USA

Economical Analysis of Consumer Price Index in USA

My Categories and Percentage of Money Allocation

Categories

% of Money spent

Food

12%

Housing

10%

Clothing

15%

Car

8%

Shoes

6%

Medical Expenses

28%

Mobile Expenses

9%

Electricity and other bills

12%

Comparison between CPI's Expenditure Categories and my Expenditure Categories

CPI Categories

% of money

My Categories

% of money

Food

15.25%

Food

12%

Housing

41.02%

Housing

10%

Apparel

3.562%

Clothing

15%

Transportation

16.875%

Car

8%

Medical Care

7.061%

Shoes

6%

Education

6.797%

Medical Expenses

28%

Recreation

6.044%

Mobile Expenses

9%

Personal Care

2.581%

Electricity and other Bills

12%

Comparison Summary

The table above depicts the comparisons between CPI's categories, percentage of money and my categories and percentage of money allocated. From the table we can clearly make out that there are some factors that are quite common while some factors are different. The category of food is present in both and thus we need to discuss the percentage of money allocated with it (Crawford, Church & Rippy, 2012). CPI allocates a high percentage of money due to the high demand of food from consumers while I have allocated a smaller percentage because of lower importance on food. Housing is allocated a high percentage because consumers spend a lot on house maintenance while I have allocated a smaller percentage because maintenance does not arise on a regular basis. Since I believe in dressing in an appropriate manner, I have assigned a high percentage of money to it while CPI has allocated a smaller percentage to it.

The aspect of transportation has been assigned a high degree of money while I have allocated a smaller degree to the aspect of fuel expenses since I also use public transport. The expenses pertaining to health have been given a smaller percentage by CPI while I have assigned a high degree to it because of the fact that I place a high degree of importance to the healthy lifestyle. The aspect of recreation is present in CPI while I have used the category of mobile expenses. Electricity and other bills have been used in my analysis while CPI has used the element of personal care. For me as an individual the mobile expenses and the payment of bills is more important while for CPI the element of recreation is more significant (Crawford, Church & Rippy, 2012).

Cost-of Living Index

Consumer Price Index is not considered to be an index based on cost of living because of a variety of factors. An acute model of cost of living would comprise of the major changes in the payment mechanisms for attaining a specific standard of living. A long term cost of living would not only measure changes in the context of prices of goods and services but would also consider the changes in the context of governmental and environmental factors that have the potential to affect a consumer's well being (Baker, S., Bloom, N., & Davis, S, 2013). A consumer price index only considers changes in prices of goods and services and does not incorporate the aspect of governmental and environmental factors. Thus consumer price index would not constitute as a ...