Question

In Brazil, the reference base period for the CPI is 2000.

By 2016, prices had risen by 187 percent since the base period. The inflation rate in Brazil in 2017 was 3.4 percent, and in 2018, the inflation rate was 3.7 percent.

Calculate the CPI in Brazil in 2017 and 2018. Brazil's CPI in 2019 was 318. Did Brazil's cost of living increase or decrease in 2019?

The CPI in Brazil for 2017 is __.

The CPI in Brazil for 2018 is __.

Did Brazil's cost of living increase or decrease.

Answer 1

CPI is the Consumer Price Index which is a basket of general goods and services consumed by the general public.

Inflation is the rise in the prices of general goods and services. Change in CPI is inflation.

The reference base year is 2000 and since it's the base year, the CPI is 100.

The prices have risen by 187% by 2016 means the CPI is 100 + 187% * 100 = 287.

There is 3.4% inflation in 2017 meaning prices have risen by 3.7% in 2017 compared to 2016.

CPI is 287 + 3.4% * 287 = 296.758

CPI in 2017 = 296.758

In 2018, inflation is 3.7%,

CPI = 296.758 + 3.7% = 307.74

CPI in 2018 = 307.74

In 2019, CPI is 318, which is around 3.3% higher than that of 2018 so

Brazil's cost of living increased in 2019.

CPI of Brazil in 2017 is 296.76

CPI of Brazil in 2018 is 307.74

Brazil's cost of living increases every year as it did in 2017, 2018, 2019.