Question

consumer price index
year xxx1 xxx2
housing 1200 1280
food 360 420
transportation 180 180
medical 450 460
education 510 560
apparel 110 130
recreation 120 100
other 300 300
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: \(1200 + 360 + 180 + 450 + 510 + 110 + 120 + 300\)
\(= 1200+360 = 1560; 1560+180 = 1740; 1740+450 = 2190; 2190+510 = 2700; 2700+110 = 2810; 2810+120 = 2930; 2930+300 = 3230\)

Step2: Calculate total CPI for Year 2

Sum all the CPI values for Year 2: \(1280 + 420 + 180 + 460 + 560 + 130 + 100 + 300\)
\(= 1280+420 = 1700; 1700+180 = 1880; 1880+460 = 2340; 2340+560 = 2900; 2900+130 = 3030; 3030+100 = 3130; 3130+300 = 3430\)

Step3: Calculate inflation rate

Inflation rate formula: \(\text{Inflation Rate} = \frac{\text{CPI Year 2} - \text{CPI Year 1}}{\text{CPI Year 1}} \times 100\)
Substitute values: \(\frac{3430 - 3230}{3230} \times 100 = \frac{200}{3230} \times 100 \approx 6.2\)

Answer:

\(6.2\%\)