oney. Inflation occurs where the increase in price is for a good or service for which there has occurred no substantial change in the characteristics of the good or service (Schultze & Mackie, 2002).
There are many measures of inflation. A well-accepted measure of inflation in the United States is the consumer price index (CPI). The CPI is available in several versions [e.g., all consumers or one of many sub-sets of consumers; and/or all goods or one of many sub-sets of goods; and not seasonally adjusted or seasonally adjusted).
The CPI is a measure of the average change in the prices paid by urban consumers for a fixed market basket of goods and services. Measuring price change through the use of a fixed market basket has a long history, dating to the early 1700s (Fixler, 1993). The assumption underlying the CPI is that consumers will choose the bundle of goods and services that maximizes the utility of their available funds, or alternatively minimizes expenditures to attain a desired level of utility (Fixler, 1993).
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