Modeling Consumer Price Index: A Machine Learning Approach

Abstract

AbstractThe change in price of a group of goods and services is reflected in terms of consumer price index (CPI), making it one of the most important economic indicators. This is also the mostly used measure of inflation. Forecasted CPI values help the Government to take corrective measures to control the economic conditions of the country. This paper implements and examines two machine learning models such as artificial neural network (ANN) and ANN model optimized with particle swarm optimization (PSO) known as ANN‐PSO to assess the accuracy in predictability of CPI. The data set for four groups such as food and beverages, housing, clothing, and footwear used for the calculation of all India CPI has been taken from the official website of the Government of India. The mean absolute percentage error (MAPE) has been used as the validator for model accuracy. The MAPE calculated for all experiments are less than 10% which indicates that the ANN‐PSO models used are highly accurate for prediction of CPI of India.