Mathematical Model of Inflation on Purchasing Power and the Influence of Inflation Rate

Zixin Wei

doi:10.54097/rpywfw62

Authors

Zixin Wei School of Tianjin Experimental Middle School, Tianjin, 300399, China

DOI:

https://doi.org/10.54097/rpywfw62

Keywords:

Inflation rate, Purchasing power, Economic development.

Abstract

Inflation reduce the purchasing power of money, impacting daily life by reducing the quantity of goods one can buy. This paper investigates the accuracy of mathematical models—the index model and the CPI model in predicting purchasing power changes from 2015 to 2025 in the United States and China. Using the verify Consumer price index (CPI) data and commodity prices (e.g., eggs, bread), we find that the models accurately predict a 26.8% decline in US purchasing power (1 dollar to 0.732 dollars) and a 13.3% decline in China (1 yuan to 0.867 yuan) and the decreasing range on prices has a slight difference from the model. China’s lower inflation (average 1.47%) protects purchasing power better than the US (2.89%). But there were some accidents that caused commodity prices to fluctuate sharply. The study highlights social contributions, such as informing financial planning and policy, and notes limitations in short-term predictions due to supply shocks.

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References

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