raunverðbreytingu

Raunverðbreyting, a term often encountered in economic contexts, refers to the adjustment of monetary values to account for changes in the purchasing power of money over time. This process is crucial for comparing economic data across different periods accurately. Inflation, the general increase in prices and decrease in the purchasing value of money, erodes the real value of currency. Therefore, to understand the true worth of money or economic figures from the past, it is necessary to adjust them for inflation.

The calculation of raunverðbreyting typically involves using a price index, such as the Consumer Price Index (CPI). This index measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. By comparing the CPI of one period to another, one can determine the inflation rate and subsequently adjust nominal values (values measured at current prices) into real values (values adjusted for inflation).

For instance, if a salary was 100,000 ISK in 2010 and the CPI has increased significantly since then, the real value of that salary in today's terms would be higher. Conversely, if one is looking at a historical investment return, adjusting it for inflation reveals the actual gain in purchasing power, not just the nominal increase in money. This adjustment ensures that economic discussions and comparisons are based on a consistent measure of value, providing a clearer picture of economic performance and changes.