Use an internet search or the University Library to locate information on the Consumer Price Index (CPI). Internet sites you might find useful include the Bureau of Labor Statistics (BLS) and the Fede

Running head: INFLATION AND ANALYSES OF MONETARY POLICIES

Inflation and Analyses of Monetary Policies

In this paper, I will present an analysis of the annual Consumer Price Index (CPI) of regular unleaded gasoline for the years 1995, 2005, 2010, and 2015. I will calculate the percent change in those index numbers or other words, the inflation rate for the following ranges: 1995 to 2005, 1995 to 2010, and lastly 1995 to 2015. I will also take a look at the overall trends of inflation over the past five years from 2013 to 2017 and discuss if my income level has kept up with the inflation rate. Based on the rise and fall of inflation rate over the last five years, I will provide some insight on how it has affected my family and me. And finally, I will analyze how a human resources manager might use CPI data for his or her role in their company.

Consumer Price Index – Unleaded Regular Gasoline from 1995 to 2015

"The BLS (Bureau of Labor Statistics) does track energy as a separate aggregate index, which in recent years has assigned a relative importance of 7.039 out of 100. In other words, Uncle Sam calculates inflation on the assumption that energy in one form or another constitutes 7.5% of total expenditures, 3.9% goes to transportation fuels – mostly gasoline" (Mislinski, 2018). In 1995, the average price of a gallon of regular unleaded gasoline was $1.147. Ten years later, in 2005, the same gallon of regular unleaded gasoline rose to an average price of $2.295. It is hard to imagine that in just over a 10-year period, the price has more than doubled, the percentage change (inflation rate) from 1995 to 2005 is 100.1%. In 2010, after just five years, the price of unleaded regular gas rose to $2.788, that is an increase of 143.0% from 1995. In 2015, after 20 years, the cost of regular unleaded gasoline is $2.448, which dipped by 34 cents from 2010 but still had an increase of 113.4% compared to the 1995 price of $1.147. Price of gas impacts the everyday lives of the people of the U.S. It determines if we decide to travel on long trips, and it even affects the fuel prices of planes and the price of plane tickets. The cost of fuel directly impacts the cost of goods that are being transported by trucks as companies need to keep fuel costs in mind.

Year	Average Price of Unleaded Regular Gas	Inflation Rate % Change from 1995
1995	$1.147
2005	$2.295	100.1%
2010	$2.788	143.0%
2015	$2.448	113.4%

Overall Inflation Trends – Last 5 Years (2013 – 2017)

Based on the information from the U.S. Bureau of Labor Statistics, the average annual inflation rate had fluctuated, quite a bit from 2013 to 2017, with the biggest difference in 2015 when inflation was at a rate of 0.1%. This statistic is compared to the inflation rate of 1.5 and 1.6 in 2013 and 2014 respectively. Then it plunged to nearly 0% in 2015. We see trends of economic growth as inflation is at 1.3% in 2016, and then breaking the 2% in 2017 at 2.1% inflation rate. "The calculation goes like this: core inflation has reliability run at +0.1% or +0.2% a month. Almost all of the variability in the remaining number is due to gas prices. Based on experience, take the change in gas prices in any given month, divide it by 10, and add that to the underlying core inflation rate. That will give you the non-seasonally-adjusted inflation rate for any given month, +/- 0.1%" (Stewart, 2017)

Inflation and Its Effects on my Income and Family

During this five-year period, I was able to switch roles within AT&T from sales to operations during the end of 2015, unfortunately, did affect my income slightly. Luckily, it was a lateral move within the company, and the difference was not as significant. My average income increases have ranged from 2 to 3 percent yearly. For 2016, I did see a dip of income to only 1.5% due to the operations role change. As I look at the comparison with my income increase rate versus the inflation rate, there are some similarities. Except 2015 when inflation was almost at 0%, I believe it did have an effect on my 2016 increase as my company also had an off year in profit which caused our bonuses for that year to be less than usual. Below is a comparison of my income increase rate and the overall inflation rate.

Year	Average Inflation Rate %	Income Increase Rate %
2017	2.10%	3.50%
2016	1.30%	1.50%
2015	0.10%	2.10%
2014	1.60%	3.00%
2013	1.50%	2.50%

Luckily, the inflation rate hasn't affected our lifestyles that much. Our income rates have been steady for the most part. The only concern we had was when moved to the Atlanta, GA area at the end of 2015. We decided to purchase a house in early 2016, we started seeing interest rates go up and we knew we needed to lock into a fixed rate mortgage for 15 years to avoid an adjustable mortgage rate that looked to be on the rise again.

CPI Usage by Human Resources Manager

As a human resources manager, their roles are to plan, direct, and coordinate the administrative functions of the company. Their primary responsibilities are to oversee recruiting, interviewing, hiring new staff, and providing guidance in monitoring wage increases. "CPI can be an acceptable proxy for cost-of-living changes in many applications, such as wage increases" (Miller, 2015). CPI can be used to base wages on the increases in costs of living. If the cost of living has risen in one geographic area, HR managers can use this information to justify a wage increase as well as increase the starting salary of recruits to be more competitive in the marketplace. The HR managers within this organization would called this setting a minimum annual wage adjustment and this would affect all existing employees and incoming recruits.

Conclusion

In conclusion, this paper has analyzed and compared the CPI for the regular unleaded gasoline from 1995 to 2015 and determined that the inflation rate of gas has more than doubled over a 20-year period. Also, the inflation over the last five years has shown that my income has pace with each other with a 2 to 3 percent increase every year and hasn't affected how my family has dealt with the ups and downs of inflation and the economy. And finally, as human resources manager, CPI can be used in different ways to monitor the costs of living and help make precise decisions on the setting wages for existing and new candidates for their business.

References

Miller, B. (2015). “How Does CPI Relate to Wage Increases?”, Compensation. Retrieve from:

https://hrdailyadvisor.blr.com/2015/06/11/how-does-cpi-relate-to-wage-increases/

Mislinski, J. (2018). "What Inflation Means to You: Inside the Consumer Price Index," Advisor

Perspectives. Retrieved from: https://www.advisorperspectives.com/dshort/updates/

2018/04/11/what-inflation-means-to-you-inside-the-consumer-price-index

Stewart, H. (2017). "Gas Prices Set to Drive Inflation Over Fed's Target," The United (UGA).

Retrieved from: https://seekingalpha.com/article/4036112-gas-prices-set-drive-inflation-feds-target