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Consumer Price Index

The consumer price index is an average measure of variation in the prices of goods and services with the consideration of the weighted mean of prices of the basket of consumer goods and services. The categories usually considered in the consumer price index are discussed below;

Classes of goods and services

  1. Food and beverages: Food and beverage are an important commodity in any market because of their high level of demand by the consumers on a daily basis. They are therefore an important category in the consumer price index because the manipulation of these goods is likely to affect the market demand.
  2. Housing: With the increase in population, the demand for shelter is also a crucial issue, and for this reason, they are a consideration in the consumer price index basket of goods and services to maintain uniformity and promote access to housing by the consumers.
  3. Transportation and communication: The transport and communication industry has developed hugely with the advancement in the modern technology. The consumer price index puts into consideration the need for people to travel, buy new cars as well as obtaining the modern equipment of communication and also has to regulate the individual prices of each in this category with the consideration of the market.
  4. Recreation: People will always want to take vacations to get some rest away from work, and the recreation activities have adversely promoted the growth of the market as a result. These, therefore, has attracted the regulation of the market be it hiking, tour, and travel, swimming, skating, etc. all for the benefit of the consumer as well as the economy.
  5. Education: The consumer price index also considers the education sector right from the pre-unit, primary, secondary all the way to the tertiary level and aims at increasing access and affordability by all the individuals as well as putting consideration on the quality of education offered.