verðbólguvísitola

Verðbólguvísitala, often translated as the Consumer Price Index (CPI) in English, is a statistical measure used to track the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. It is a key indicator of 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 calculation of the verðbólguvísitala involves collecting price data for a wide range of items, including food, housing, clothing, transportation, medical care, recreation, and education. These items are weighted according to their importance in the typical consumer's budget. The index is then calculated by comparing the cost of this basket of goods and services in the current period to its cost in a base period. A value greater than 100 indicates that prices have risen since the base period, while a value less than 100 indicates a decrease.

Governments and central banks use the verðbólguvísitala for various purposes. It helps them monitor the economy, make informed monetary policy decisions, and adjust wages, pensions, and social security benefits to keep pace with the cost of living. For individuals, it provides a way to understand how their purchasing power has changed over time. Fluctuations in the verðbólguvísitala can signal economic instability and influence consumer and business confidence.