Inflation Measures

Q: How is inflation measured? - S.P., Syracuse, N.Y.

A: Meet the U.S. Consumer Price Index (CPI). According to the Bureau of Labor Statistics (BLS), the CPI "is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services." These "urban consumers" reflect 87 percent of the U.S. population, and the "basket" includes items such as cereal, fuel oil, pet food, rent, postage, cigarettes, college tuition, prescription drugs and haircuts. The index shows that if you bought such goods and services for $100 in 1978, in 2008 they would have cost you $324. The BLS adds: "The CPI market basket is developed from detailed expenditure information provided by (more than 30,000) families and individuals on what they actually bought."

The index is used as an economic indicator and a means of adjusting dollar values, among other things. Learn much more at www.bls.gov/cpi/cpifaq.htm.

Q: Is renter's insurance worth it? - B.W., Ocala. Fla.

 

 

A: Definitely consider getting it. It can protect you against theft of or damage to your personal property, cover some or all of your personal liability, and maybe even pay for temporary housing if your apartment is damaged.

When signing up, you decide the total dollar value of the property you want to insure. Some policies will pay you enough to cover the depreciated value of various items at the time of loss, while others will cover replacement costs. The latter is much better.

Renter's insurance can cost as little as $100 or less per year. Compared with the losses you might incur, it's often well worth it. Learn more at www.fool.com/ insurancecenter and www.iii.org.

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