- is a measure estimating the average price of consumer goods and services purchased by households.
- the percent change in the CPI is a measure estimating inflation.
- also known as cost of living index.
- such an index would show how consumer expenditure would have to move to compensate for price changes so as to allow consumers to maintain a constant standard of living.
FORMULA FOR CALCULATING THE INFLATION:
Example:
The formula for calculating the Inflation Rate looks like this:
Inflation Rate = ((B - A) / A) * 100
Lets assume for simplicity,
At 2008, the CPI was 180 and today the CPI is 168, the calculation will be:
Inflation Rate = ((180 – 168) / 168) * 100
= (12 / 168) * 100
= 0.07143 * 100
= 7.14 %
| All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the blogger. |
|---|
