Compute the inflation rate for each year 1989-2003 and determine which years were years of inflation. In which years did deflation occur?

(Inflation) Here are some recent data on the U.S. consumer price index:

Year CPI Year CPI Year CPI Year CPI
1988 3 1993 144.5 1998 163.0 2003 184.0
1989 0 1994 148.2 1999 166.6
1990 7 1995 152.4 2000 172.2
1991 2 1996 156.9 2001 176.9
1992 3 1997 160.5 2002 179.9
Compute the inflation rate for each year 1989-2003 and determine which years were years of inflation. In which years did deflation occur? In which years did disinflation occur? Was there hyperinflation in any year?

Expert Solution

Year	CPI	Inflation
1988	3
1989	0	-100%
1990	7	more than 600 %
1991	2	-71%
1992	3	50%
1993	144.5	4717%
1994	148.2	2.56%
1995	152.4	2.83%
1996	156.9	2.95%
1997	160.5	2.29%
1998	163	1.56%
1999	166.6	2.21%
2000	172.2	3.36%
2001	176.9	2.73%
2002	179.9	1.70%
2003	184	2.28%

Inflation: Increase in price level

Deflation: Decrease in inflation

Hyperinflation: Sudden increase in inflation rate

Disinflation: Negative inflation rate

The formula to calculate the inflation = (CPI2-CPI1)/CPI1)*100

Years of inflation: 1992, 1994, 1995, 1996, 1999, 2000, 2003

Years of deflation: 1989 and 1991

Years of disinflation: 1997, 1998, 2001 and 2002

Years of hyperinflation: 1990 and 1993

Rahul Sunny answered 2 years ago

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