The Consumer Price Index and retail sales effect each other because “the CPI and its components are used to adjust other economic series for price changes and to translate these series into inflation-free dollars.” Retail sales is an example of this because “the use of the CPI as a deflator of the value of the consumers dollar to find its purchasing power. The purchasing power of the consumers dollar measures the change in the value to the consumer of goods and services that a dollar will buy at different dates. In other words, as prices increase, the purchasing power of the consumers dollar declines.” Both the CPI and retail sales affect GDP (Gross Domestic Product) once the Consumer Price Index is adjusted for inflation, you can use the retail sales data to get the gist of how the sales will affect GDP.
Posted on: Mon, 02 Dec 2013 02:06:47 +0000