Question

Assuming the price index in 2017 was 127 and 136 in 2018, what was the inflation rate between 2017 and 2018?

Answer 1

Since the Consumer Price Index (CPI) can be defined as a measurement which evaluates the weighted average of prices of a basket of consumer goods and services. For example transportation, food and medical care etc.

CPI = ∑PiQi

i =1, 2, 3 .......n

Pi is prices of number of goods

Qi is quantity of number of goods.

Inflation rate between year 2017 and 2018= [(CPI of 2018 – CPI of 2017)/CPI of 2017]*100

=[(136-127)/127]*100

=(9/127)100

=0.07086614*100

=7.08%