Market Basket: Commodity bundles, used to track inflation
In economics a customer basket, market basket or commodity basket is a set of different amounts of different goods and possible services.
The commodity basket will contain goods and services a typical consumer will likely need. Commodity baskets can be used for two things: First, the price level of two economies can be compared. Secondly, using the same basket, it is possible to show how prices change over time. The amount of money needed to buy everything in the basket, over time, is called consumer price index.
Commonly in the basket
The basket will contain different goods and services, such as:
- Food and drink: milk, bread, coffee, meat, beer, wine, etc.
- Housing: monthly rent, fuel oil (used for heating), furniture
- Clothing: shirts, pants, socks, jewelry, etc.
- Transportation: Cost of season ticket of public transport, cost of car, cost of fuel for the car
- Medical care: Cost of prescription drugs, perhaps cost of medical insurance if it exists.
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