Customer Price Index (CPI) and Inflation

The United States value of the dollar and the consumerís purchasing power depends on the price of frequently purchased consumer items. Household goods and services represent a suitable example for estimating the purchasing power of consumer dollars. The consumer price index (CPI) considers the weighted average of the common household goods and services to determine the economic trends.

Rebound

The Coronavirus pandemic induced a downward economic turn on the global economy as most states and nations imposed lockdowns and curfews advising people to stay at home. Halting business operations and industrial operations led to a decline in consumer prices, which is now rebounded (Omeokwe). A cost rebound is, therefore, a shift in prices from a lower level indicating increased economic activities.

CPI rebound is mostly harmful to the consumer since it forces the people to obtain goods and services at a higher price straining the purchasing power of consumer dollars. Usually, consumers spend a lot of money on household goods and services, and an increase in the CPI increases spending (Omeokwe). On the contrary, CPI increase promotes the rise of substitute products creating market competition, often beneficial to consumers.

Inflation

Investors and other users of predictive data modelling consider the CPI as the inflation index since it highlights the average price increase in consumer goods. Inflation often seeks to extrapolate the rate at which prices for goods and services increase at the expense of the consumerís purchasing power. Usually, inflation is because of shrinking supplies and increasing demand for goods and services, creating an imbalance.

Conclusion

In conclusion, the Coronavirus pandemic led to closure o industries, businesses, and borders restricting trade. Loss of jobs, coupled with low economic activity reduced the consumerís purchasing power leading to a reduction in CPI. Shifts in market trends, however, indicate a rise in CPI suggesting the resurgence of economic activities.

Works Cited

Omeokwe, Amara. "U.S. Consumer Prices Broadly Rebounded in August." WSJ, 11†Sept.†2020, www.wsj.com/articles/u-s-consumer-prices-broadly-rebounded-in-august-11599829404. Accessed 17†Sept.†2020.