Part 1
The CPI, commonly known as the CPI-U, indicates the average price changes overtime paid by urban consumers for services and goods. All expenditures are divided into eight categories by the Labor Statistics Bureau, which assigns a proportionate size to each. In 2020, the CPI-U (all goods) increased by 1.4 per cent. That was a lesser increase than the 2.3 per cent increase in 2019 and the smallest December-to-December increase since 2015.
Before seasonal adjustment, the all items index gained 4.2 per cent in the previous year. That is the most significant 12-month increase since September 2008, when it increased by 4.9 per cent. The CPI-U grew 0.8 per cent on a seasonally adjusted basis in April. That was after gaining 0.6 per cent in the previous month of March. According to the US Labor Statistics Bureau, the index has risen at an annual pace of 1.7 per cent on average during the last ten years. A significant decline in CPI means a deflation or a steady decline in the prices of services and goods being produced. This decline is advantageous to households in the US as goods are cheaply available but disastrous to both the government and the business investors.
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Part 2
The CPI is the nation’s primary indicator of inflation rates and measures average price changes over time. Thus, the CPI is an important and sometimes controversial measure because it directly affects what the government takes in and pays out. A relatively slow increase in CPI means a slow rise in the prices of services and goods. That is of much concern to Bata Corporation as the Corporation has to make business decisions based on the changing CPI. A slow rise in CPI will necessitate a corresponding slow rise in the input and output of the firm. The decisions meant will be geared to matching an output that corresponds to the slow rising market prices. That is essential as it provides a steady supply of goods and services and prohibits stagnation of outputs.
The rapid increase in CPI translates to a rapid rise in the prices of the produced goods and services. That affects the business decisions made by Bata Corporation as it requires increased input to create and tap in the opportunity of the increased prices. Different choices need to be made by the Corporation as often as possible since Government and Economic Regulations could affect the raw materials supply, impacting demand since government regulations influence pricing choices. The Corporation should be aware of such rules and always follow protocols. The Bata Corporation make decisions so that its products are aligned with athletics; the demand can be affected during winter as few sports events occur during this season (Sanjeev Mehta, 2020) .Another conclusion could see the corporation diver into manufacturing different items like vehicles, seat cover, leather wallets, leather jackets, and other tannery attires to take advantage of the rising prices of produced goods.
Lastly, if the CPI declines significantly, it means the prices of goods and services are fluctuating at a substantially higher rate. The effects could shock the country's economy and the operations of Bata Corporation. The significant decline in CPI means there is a deflation or a steady decline in goods and services prices. This decline is advantageous to households as goods are cheaply available but disadvantageous to both the government and the Bata Corporation. The Corporation, if not making wise decisions during such times, could land itself into losses. Therefore, the decision made could involve fewer inputs on raw materials, resulting in fewer outputs until such a period is over, and then the Corporation can re-start mass production. This decision would be effective and reliable as it would prevent the Corporation from possible losses.
References
Sanjeev Mohta. (2020). Bata's annual report: 4 observations that make it an interesting stock . Markets Mojo. Retrieved May 27, 2021, from https://www.marketsmojo.com/blog/investment-ideas/batas-annual-report-4-observations-that-make-it-an-interesting-stock-978.html
U.S. Bureau of Labor Statistics. (2021). CPI for All Urban Consumers (CPI-U) . Retrieved May 27, 2021, from https://data.bls.gov/pdq/SurveyOutputServlet
