New! Hire Essay Assignment Writer Online and Get Flat 20% Discount!!

Published : 29-Sep,2021  |  Views : 10

## Question:

Calculate the rate of inflation based on the CPI and the rate of average weekly earnings growth and plot the inflation rate and weekly earnings growth on a single diagram using time on the horizontal axis. Provide an economic interpretation of these time series plots.

Set1 : this uses CPI data given in catalogus series no A2325846C for all goods. These goods cover 11 groups- Food and non-alcoholic beverages, Alcohol and tobacco, Clothing and footwear, Housing Furnishings, household equipment and services, Health, Transport, Communication, Recreation and culture, Education and Insurance and financial services.

‘A price index is a weighted average of the prices of a selected basket of goods and services relative to their prices in some base-year’.( econport.org. Price Index).  For comparison over time we choose a year as base year (2012 in this case). It is clear that the CPI values before 2012 are less than 100, while they are more than 100 after 2012.

Changes in CPI number are important, as they are used as ‘ a measure of changes, over time, in retail prices of a constant basket of goods and services representative of consumption expenditure by resident households in Australian metropolitan areas’. ( Abs.gov,au. Consumer Price Index).

Changes in CPI are used alternatively with inflation, which  ‘is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling’. ( Investopedia,com, Inflation).
For earnings, we have multiple series, but we chose catalogue no A85002148L.

This is because Average Weekly Ordinary Time Earnings (AWOTE), ‘ is the most stable series from this publication over time, as it excludes overtime, part time and junior rates of pay’.(meteor.aihw.gov.au . Australian Institute of Health and Welfare). The series label is A85002148L

Both datasets are presented in annual form, after converting them from quarterly and bi annual basis using simple average formula.

 year weekly earnings CPI inflation change in weekly earnings 2006 1034.95 85.925 3.56% 3.21% 2007 1087.7 87.925 2.33% 5.10% 2008 1138.8 91.75 4.35% 4.70% 2009 1207.3 93.375 1.77% 6.02% 2010 1262.65 96.1 2.92% 4.58% 2011 1317.4 99.275 3.30% 4.34% 2012 1372.6 101.025 1.76% 4.19% 2013 1428.95 103.5 2.45% 4.11% 2014 1465.55 106.075 2.49% 2.56% 2015 1491.8 107.675 1.51% 1.79%
• Changes in CPI or Inflation swing up and down, with a maximum of 3.56% and minimum value of 1.56%
• The changes in AWOTE have fallen after 2009, after rising till 2009.
• The gap between the series has been declining, and ot was almost nil in 2014.

## References

Consumer Price Index, n.d. retreived from http://www.abs.gov.au/AUSSTATS/abs@.nsf/0/1E564CACF4CBEC32CA256ED8007EF06E?opendocument

Get An Awesome Price Quote For Your Paper – Absolutely FREE!

### Our Amazing Features

No matter how close the deadline is, you will find quick solutions for your urgent assignments.

#### 100% Plagiarism-free content

All assessments are written by experts based on research and credible sources. It also quality-approved by editors and proofreaders.

#### 500+ subject matter experts

Our team consists of writers and PhD scholars with profound knowledge in their subject of study and deliver A+ quality solution.

#### Covers all subjects

We offer academic help services for a wide array of subjects.

#### Pocket-friendly rate

We care about our students and guarantee the best price in the market to help them avail top academic services that fit any budget.

Getting started with MyEssayAssignmentHelp is FREE

15,000+ happy customers and counting!

Rated 4.7/5 based on
1491 reviews
;