Consumer Price Index

PURPOSE
This individual assignment gives a practical look at how price indices are measured. It also establishes base prices for calculating inflation rates.

INSTRUCTIONS
Students should pick real transaction prices for goods they actually purchase, in a country of their choice (It does not have to be Japan). One can use prices from catalogs or online shops/retailers depending on their real purchasing habits, if it is possible to track down the prices from the same retail platform for a few years (including the base year).
Make sure to clearly state your assumptions, process and methodology and problems faced.

POINTS FOR DISCUSSION
This assignment introduces the idea of market based selection for price indices. The goods that students usually pick for their market basket account for a relatively small portion of consumer spending. Also write your assessment as to which goods are likely to change prices frequently.

THE ASSIGNMENT
The Consumer Price Index includes the prices of hundreds of goods purchased by base consumers. It is possible to construct many other price indexes.
Your Mission: Create a personalized Price Index

STEPS
1. CHOOSE FIVE OR MORE DIFFERENT PRODUCTS (be specific e.g. unleaded petrol, Asahi Super Dry)
2. PICK A QUANTITY FOR EACH PRODUCT (e.g.30 Litres of Petrol, 12 Bottles/Cans of Asahi Super Dry)
3. FIND THE ACTUAL PRICE OF THESE PRODUCTS
4. CALCULATE THE TOTAL COST OF BUYING THESE PRODUCTS
5. CHOOSE THE BASE YEAR AND COMPUTE THE INDEX

Consumer Price Index

A consumer price index measure changes in the price level of market basket of consumer goods and services purchased by households. The aim of this paper is to present a personalized Price Index and to show changes in prices of goods and services. Prices for this assessment are taken from the online shop Amazon.com because it is possible to track down the prices for a few years. The following products are included in market basket:
• Laffy Taffy Candy Jar, Banana (1 pack = 145 peaces) = $13.54, $13.93, $9.97 from 2015 to 2017, respectively
• Pacific Foods Organic Roosted Red Pepper and Tomato Soup (1 box =12 packs) = $19.94, $20.91, $20.27 from 2015 to 2017, respectively
• Potato Chips Cape Cold Original (1 pack) = $2.73, $2.89, $2.88 from 2015 to 2017, respectively...

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