CPI is a common and important economic data indicator. The full English name is Consumer Price Index, and the Chinese name is Consumer Price Index. Generally, in applications, they are referred to as CPI in English. When it comes to CPI, there are always people who say that this is an economic indicator closely related to everyone. Why is this?
It is said that "Seven Things to Do in Opening the Door, Fire, Rice, Oil, Salt, Sauce, Vinegar Tea". For most people, in life, they care about the daily routines of living. The prices of these daily consumer goods will have more or less impact on the quality of life at home.
CPI statistics are goods or services related to daily consumption, covering the prices of goods and services in 8 categories, including food, tobacco, alcohol, clothing, residence, daily necessities and services, transportation and communications, education, culture and entertainment, medical care, other supplies and services, etc. Since 2016, the statistical composition and rights ratio of the CPI are: 34% of food, 14% of entertainment, education and cultural supplies and services, 13% of residence, 10% of transportation and communications, 10% of medical and health care personal supplies, 9% of clothing, 6% of home equipment and maintenance services, and 4% of tobacco, alcohol and supplies. The calculation formula of
CPI uses the Lasbeers formula first created by German scholar Lasbeers in 1864. The unit is percentage, which is generally calculated to a digit after the decimal point.
CPI's main function is to reflect the level of inflation and the strength of purchasing power. So, how should CPI be understood?
For example, if the CPI increased by 1.3% year-on-year in July 2021, it means that the goods that can be bought at 10,000 yuan in July 2020 will cost 10,130 yuan to buy in July 2021. That is to say, the purchasing power of 10,130 yuan in July 2021 is equivalent to 10,000 yuan in July 2020, which means that the purchasing power of currency is weaker than before.
In addition, if Azhen's monthly salary in July 2020 was 5,000 yuan, and by July 2021, the monthly salary would still be 5,000 yuan, this is equivalent to Azhen's monthly salary in 2021 being "actually reduced" compared to 2020, because in July 2021, it would take 5,065 yuan to have the purchasing power of 5,000 yuan in the same period in 2020. In other words, if Azhen's boss Aqiang did not raise her salary in 2021, it would mean that Azhen was "reduced".
So, is the inflation reflected by the 1.3% CPI high or low? According to internationally accepted standards, 3% is the inflation warning line of CPI, and between 1% and 3% is "crawling inflation", which is an acceptable normal range of price increases. If it exceeds 3%, you must start to pay attention to the growth rate of inflation.
Although 1%-3% falls into the normal range, if you don’t manage your finances, it means that the money in your pocket will gradually depreciate. This is also one of the main reasons why financial management is said to be to fight inflation.
Simply put, the safest way to outperform CPI and fight inflation is to have a financial return rate of more than 3%. Obviously, the annual interest rate of 1.75% for one-year fixed deposits and 2.75% for three-year fixed deposits are no longer competent for this task. Therefore, to fight inflation through financial management, we still need to seek other investment methods such as large-denomination certificates of deposit, funds or stocks.
Warm reminder: Investment is risky, you need to be cautious when entering the market. To achieve small wealth goals in financial management, mastering efficient professional knowledge and skills is the key, rather than drinking financial information chicken soup. For more information, please go to the homepage to view!
