Unit 2 · Level 1 · Inflation
The basket
Every month, statisticians price a huge imaginary shopping basket (rent, bread, petrol, haircuts, phone plans) weighted by what the average household buys. The change in that basket's total price is CPI, the official inflation number. It's an average, not YOUR receipt.
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What you get asked
What does CPI actually measure?
CPI tracks a weighted basket of typical household purchases. It's a thermometer for consumer prices, not a full economic scan.
Match each term to its meaning.
Core inflation isn't a claim that food doesn't matter. It filters out volatile prices to reveal the underlying trend.
If your rent rises faster than the average basket, your personal inflation is ___ than CPI.
Renters, drivers, and big grocery shoppers each live a different inflation. CPI is everyone's average and nobody's exact reality.
Why does your personal inflation differ from the official CPI?
A student spending half their income on rent lives a different inflation than a homeowner. Same country, different baskets.
Inflation of 2% means…
It's an average over the whole basket. Within it, energy might jump 15% while electronics get cheaper. And no, salaries don't adjust by themselves. 🐜
The rest of this unit
Why prices rise, who wins, who pays, and what happens when money dies.