Daily CPI is the effective general price level index

The general price level changes at least daily in all national economies and monetary unions under all monetary environments - low inflation, high inflation, hyperinflation and deflation. 

The Daily CPI is thus the effective general price level index for a specific economy or monetary union. 

This is confirmed by all countries that issue sovereign inflation-indexed bonds. They have to necessarily calculate their specific Daily CPIs and they have to make them publicly available by publishing them. They all update these government inflation-adjusted bonds daily in terms of their specific country Daily CPIs - the absolute proof the Daily CPI is the effective general price level index for an economy or monetary union.

The Daily CPI is an approximation of the monthly published CPI in that it is a lagged daily interpolation of the CPI. 

The Daily CPI is always known in advance. There are never any surprises.

Some of the countries issuing sovereign inflation-indexed bonds:

1. Argentina
2. Australia
3. Brazil
4. Canada
5. Chile
6. Colombia
7. Finland
8. France
9. Germany
10. Greece
11. Holland
12. Hong Kong

13. Iceland
14. India
15. Israel
16. Italy
17. Japan
18. Kuwait
19. Mexico
20. New Zealand
21. Portugal
22. Qatar
23. Saudi Arabia
24. South Africa
25. South Korea
26. Spain
27. Sweden
28. Turkey
29. United Arab Emirates
30. United Kingdom
31. United States

Nicolaas Smith Copyright (c) 2005-2018 Nicolaas J Smith. All rights reserved. No reproduction without permission.

Zero monetary effect

Zero inflation, deflation and hyperinflation effect.

Implementing IFRS and US GAAP authorized Capital Maintenance in Units of Constant Purchasing Power in terms of the Daily CPI 

during

1. low inflation results in zero low inflation effect,

2. high inflation results in zero high inflation effect,

3. hyperinflation results in zero hyperinflation effect and

4. deflation results in zero deflation effect.

South American countries´ central banks called it "monetary correction" in the 1970s to 1990s. The best example was the implementation of this principle with the use of the Daily Unidade Real de Valor in Brazil in 1994. 

Zero monetary effect can only be achieved when CMUCPP is implemented to reflect every change in the general price level, that is, at least daily in terms of the Daily CPI in non-hyperinflationary economies.

CMUCPP also has to be implemented in terms of the Daily CPI or daily parallel rate when a Daily CPI is not available during hyperinflation. 

However, it must be remembered that the general price level can and sometimes does change more than once a day during hyperinflation. This must be accompanied in the whole hyperinflationary economy, in accounting records and in contracts in order to correctly achieve zero hyperinflationary effect. 

Under all the above circumstances, the constant purchasing power of all constant real value non-monetary items (e.g., all items in shareholders equity, trade debtors, trade creditors, salaries, wages, pensions, taxes payable, taxes receivable, etc.) would automatically be maintained constant - ceteris paribus.

Nicolaas Smith Copyright (c) 2005-2018 Nicolaas J Smith. All rights reserved. No reproduction without permission.