The Difficulty of Measuring the Cost of Living

The purpose of measuring the difficulty of living expenses is to measure the cost of maintaining the standard of living of working-class families. It was first introduced in 1914. As prices continue to change, it is difficult to measure living expenses. In other words, the product cost will also change. For example, since the price changes due to rising costs and inflation, the price of Coca-Cola in 2000 increased to $ 1 due to the increase in wage demand, so the cost increased, so the coke's selling price rose to $ 2 in 2001 .

Cost of living. Living expense index measures prices in the range of goods and services over time. A bundle of goods and services (called a market basket) is acquired by asking a group to measure living expenses to record the purchase price. Next we will create an index using this data. Like other general indicators, CPI rarely responds to changes in the actual cost of living for specific households. Household consumption patterns depend on characteristics based on age, income, composition, taste, and other personal preferences. These differences mean that the CPI varies greatly in the ability to measure changes in living expenses in different groups. In addition, consumption patterns change over time, and the quality of products also changes.

Consumer's living expenses depend on the price of many goods and services consumed and the proportion of each good or service included in households. In order to measure the average consumer's living expenses, government agencies conduct household surveys to determine baskets of commonly used items and track purchase costs for that basket. (Housing expenses, including rents and mortgages, constitute the largest element of the US consumer basket.In other countries, especially poor countries, food is the majority of households, Consumer price index (CPI) is the rate of change in consumer price index over a certain period of time and the consumer price inflation rate is the most widely used (for example, if the base year CPI is 100 and the current CPI is 110 In case, the inflation rate is 10%.)