ECO 1102 Lecture Notes - Lecture 8: Core Inflation, Purchasing Power Parity, Gdp Deflator

• School: University of Ottawa
• Department: Economics
• Course: ECO 1102
• Professor: Gordon Lenjosek

Document Summary

Cpi and consumer price index from 2,200 items in the basket. Use the formula that has been introduced from last class. You can see that it grows a little until the 1960s then grows drastically until present day. View slide 13 and 14 to see the graph and a visual of the inflation that occurs. On average it was 4% per year. When we talk about average, we talk about the normal rate of inflation for that time period. Bank of canada, targeted 2% wanting to bring the rate of inflation down. Remember: when you are dealing with cpi you are dealing with all items but sometimes, the prices of products, drastically vary. They may have temporary swings, and this may mask the real rate of inflation (e. g. gas, food). However, the core inflation tends to be a little different.