Question

1. Answer the following questions regarding the Consumer Price Index For the CPI values shown below, calculate the rate of inflation (please round to first decimal place) in each year from 1930 to 1933. a. Year 1929 1930 1931 1932 1933 CPI 51.3 50.0 45.6 40.9 38.8 b. Look up Consumer Price Index for All Urban Consumers: All Items (CPIAUCSL) on the St. Louis Fed's data site (FRED). Convert the CPI index series from 1948 to 2018 into inflation rates by changing the units to "percent change from year ago." To match up with the frequency in part a, please convert the frequency to "annual" with aggregation method "average." Copy and paste the graph into your homework. Looking at the inflation data you calculated in part a and the inflation data for more recent periods collected in part b, what is unusual about the time period in part a? Are there similar periods like this in the more recent period of 1948-2018? What historical events are associated with these "unique" periods? c.

Answer 1

Formula to calculate Infation from CPI is Percentage change of CPI. For examples CPI 2000 =174.0 and CPI 2005 =196.8

So inflation rate = [(196.8-174.0)/174.0]* 100

Year	CPI	INFLATION
1929	51.3	0
1930	50.0	-2.53
1931	45.6	-8.8
1932	40.9	-10.30
1933	38.8	-5.4

2.  

year	CPI	INFLATION
1948	24.05	0
1949	23.75	-1.2
1950	23.51	-1.01
1951	25.620	8.97
1952	26.710	4.25
1953	26.850	.524
1954	26.780	-.260
1955	26.880	.373
1956	27.510	2.34
1957	28.410	3.27
1958	28.950	1.90
1959	29.350	1.38
1960	29.810	1.56
1961	29.980	.570
1962	30.380	1.33
1963	30.880	.164
1964	31.210	1.06
1965	31.850	2.05
1966	32.920	3.35
1967	33.770	2.58
1968	35.600	5.41
1969	37.700	5.89
1970	39.800	5.57
1971	40.900	2.76
1972	42.500	3.911
1973	45.000	5.88
1974	51.000	13.33
1975	53.500	4.90
1976	57.900	8.22
1977	62.000	7.08
1978	67.900	9.51
1979	76.000	11.92
1980	83.900	10.39
1981	93.400	11.32
1982	95.000	1.71
1983	100.400	5.68
1984	105.700	5.27
1985	108.500	2.64
1986	110.200	1.56
1987	114.300	3.72
1988	117.200	2.53
1989	126.300	7.76
1990	134.200	6.25
1991	137.800	2.68
1992	142.100	3.12
1993	145.000	2.04
1994	149.400	3.03
1995	151.200	1.20
1996	155.500	2.84
1997	161.800	4.05
1998	163.900	1.29
1999	167.800	2.37
2000	174.200	3.81
2001	177.400	1.83
2002	178.000	.338
2003	183.700	3.20
2004	189.200	2.99
2005	193.100	2.06
2006	203.800	5.54
2007	210.834	3.45
2008	215.208	2.07
2009	212.709	-1.16
2010	217.403	2.20
2011	224.806	3.40
2012	228.590	1.68
2013	232.282	1.16
2014	236.028	1.61
2015	236.156	0.05
2016	240.602	1.88
2017	243.962	1.39
2018	252.760	3.60