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The International Consumer Price Index (CPI) is a set of statistics that attempts to show how much the average global consumer is paying for basic commodities like food, energy, and housing. Most countries calculate their own national price indices on some recurring basis, be it monthly, quarterly, or yearly. Having this information allows economists and government officials to understand prevailing market forces and measure inflation as it affects the average citizen. Countries rarely follow the same collection and calculation standards, however, which makes finding the International Consumer Price Index more complicated than simply amalgamating and averaging findings. International bodies of economists and statisticians are usually charged with compiling the numbers based on a sophisticated set of weighted data points.
Most of the world’s industrialized nations regularly calculate a consumer price index to track inflation and consumer spending on items deemed necessities. Nationally, this information helps lawmakers and economist keep track of price shifts over time, which can affect everything from voter outlook to poverty and crime predictors. There are also times when a more global perspective is needed. The International CPI applies the same concept to a much larger data set and provides a snapshot of global spending trends over set periods.
Statistics that make up the International CPI are in constant flux, changing on an often daily basis. Usually, the numbers presented in reports and calculations as the International CPI are averages meant more as guidelines than definitive readings. Numbers are collected and compared on a regular schedule each year at set intervals, but are only meant as general benchmarks.
There are a number of reasons why the International CPI is important. First, it gives individual countries an idea of how they stack up on the world’s stage. A national CPI that is more favorable than the international number often indicates that a domestic economy is healthy — or at least, is healthier than most. The number is also used by international merchants and exporters to set prices and understand global spending thresholds. International economics depends in many respects on a solid understanding of buying patterns and price inflation both within and between markets.
Usually, the international CPI is more of a rough estimate than a hard-and-fast statistic. Much of this owes to the differences in data availability from place to place. Some of it is also a factor of the different calculation methods at play.
On a national level, there is usually but one entity — usually a government agency — charged with calculating the domestic CPI. Local agencies can then use this number to break down community or city CPI data and CPI forecast information. There is no single entity charged with calculating the international index, however.
The United States’ Department of Labor periodically calculates an International CPI based on data from select, often changing countries. Several groups within the United Nations, most notably the International Labour Organization, also compile data, as does the International Monetary Fund. Each group uses its own separately collected index points and processes. The results are usually comparable, but have significant variances, too.