WINTERS` EXPONENTIAL FORECAST MODEL IN PREDICTING THE INFLATION RATE HAVING SEASONAL, TREND AND NOISE COMPONENTS: USA INFLATION CASE FOR 30 YEARS

Abstract

Inflation is one of the most critical factors in overall economic development of the country. high inflation might have positive or negative impact on the business as indicated below “Industry-wide price rises enable revenues to grow, Growing revenues + constant gross margin = higher gross profit, Makes using debt as a source of finance cheaper in real terms” (Inflation and Business | tutor2u, 2021) as positive impact, and “If costs are rising due to inflation, a business may not be able to pass them onto customers (PED), Inflation can disrupt business planning and lead to lower investment” as negative impact (Inflation and Business | tutor2u, 2021). Thus it has always been crucial to analyse the inflation and make decisions based on the forecasted inflation rates for future. Therefore, in this report 19 year, monthly break even inflation of USA will be analysed and forecasts for future inflation rates will be done. The range of data begins with 2003 January`s inflation rate, and the last record ends with 2021 October inflation rate.