U.S. Consumer Prices Gain Slightly

February 3, 2020

US consumer prices gain slightly.

Questions

1. What was the change in the CPI in the 12 months through December 2019?
2. Given your answer to #1, and the information that the CPI in December 2018 was 251.2, what is the CPI in December 2019?
3. Why is the inflation rate calculated using the PCE deflator sometimes different from the inflation calculated using the CPI?
4. According to the news article, the Federal Reserve uses the core PCE inflation rate for its 2 percent inflation target. Why does the Fed choose this inflation rate?
5. What are the biases in the CPI? How do alternative price indexes address these biases?