Question

consumer price index
year\txxx1\txxx2
housing\t1200\t1220
food\t340\t360
transportation\t200\t210
medical\t400\t440
education\t530\t530
apparel\t110\t100
recreation\t120\t100
other\t300\t320
calculate the inflation rate from year 1 to year 2 using the consumer price index.
?%
round to the nearest tenth of a percent.

Explanation:

Step1: Calculate total CPI for year 1

Sum all the CPI values for year 1: \(1200 + 340 + 200 + 400 + 530 + 110 + 120 + 300\)
\(= 1200+340 = 1540; 1540+200 = 1740; 1740+400 = 2140; 2140+530 = 2670; 2670+110 = 2780; 2780+120 = 2900; 2900+300 = 3200\)

Step2: Calculate total CPI for year 2

Sum all the CPI values for year 2: \(1220 + 360 + 210 + 440 + 530 + 100 + 100 + 320\)
\(= 1220+360 = 1580; 1580+210 = 1790; 1790+440 = 2230; 2230+530 = 2760; 2760+100 = 2860; 2860+100 = 2960; 2960+320 = 3280\)

Step3: Use inflation rate formula

Inflation rate formula: \(\text{Inflation Rate} = \frac{\text{CPI}_2 - \text{CPI}_1}{\text{CPI}_1} \times 100\%\)
Substitute \(\text{CPI}_1 = 3200\) and \(\text{CPI}_2 = 3280\):
\(\frac{3280 - 3200}{3200} \times 100\%=\frac{80}{3200} \times 100\% = 0.025\times 100\% = 2.5\%\)

Answer:

2.5%