Inflaatioindeksi

Inflaatioindeksi, meaning inflation index in Finnish, is a statistical measure used to track changes in the general price level of goods and services over time. It is a crucial tool for understanding and quantifying inflation, which is the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.

The most common inflation index is the Consumer Price Index (Kuluttajahintaindeksi). This index measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. The basket includes items such as food, housing, transportation, clothing, medical care, and recreation. The index is calculated by dividing the price of the basket in the current period by the price of the same basket in a base period and multiplying by 100.

Inflation indices are vital for economic policy. Governments and central banks use them to make informed decisions about monetary policy, such as adjusting interest rates to control inflation. They also play a role in wage negotiations, pension adjustments, and the indexing of various contracts and financial instruments to maintain their real value. Changes in the inflation index directly impact the cost of living and the purchasing power of money. A rising index indicates inflation, while a falling index suggests deflation.