Question

Confused how to calculate SPI with lots of info and if is should be using the average of all the info?

Year: 2018
Goods or Service	Quantity for a typical student in a year	Student 1 price	Student 2 price	Student 3 price	Average Price	Cost of Basket
Unleaded Gas	100 gallons	$2.45	$2.90	$2.60	$2.65
Hygiene Products	25	$3.50	$3.00	$4.00	$3.50
Textbooks	10	$150.00	$215.00	$175.00	$180.00
Coffee	150	$2.00	$4.00	$3.25	$3.08
Calculators	1	$100.00	$85.00	$110.00	$98.33
Total Cost of 2018 Basket						=

Year: 2019
Goods or Service	Quantity for a typical student in a year	Student 1 price	Student 2 price	Student 3 price	Average Price	Cost of Basket
Unleaded Gas	100 gallons	$3.25	$2.90	$2.50	$2.88
Hygiene Products	25	$3.00	$4.00	$4.50	$3.83
Textbooks	10	$90	$100	$150	$113.33
Coffee	150	$2.50	$3.50	$4.00	$3.33
Calculators	1	$100.00	$110.00	$125.00	$111.67
Total Cost of 2019 Basket						=

Set 2018 as the base year. Calculate the SPI for 2018 and 2019 and find the inflation rate.

Year	Value of Student Market Basket	SPI	Inflation Rate
2018			-
2019

Answer 1

As indicated in the question that we need to use average price for considering price of an average student for the various items.

Also average or typical quantities have been provided for each good which is used by a Student instead of proper weighted quantities so we will use both average prices and the typical quantity for calculating the SPI.

For 2018

Item	Quantity	Average Price	Cost of basket
Gas	100	2.65	265
Hygeine products	25	3.5	87.5
Textbooks	10	180	1800
Coffee	150	3.08	462
Calculator	1	98.33	98.33

Total cost of basket in 2018= 2712.83

For 2019

Item	Quantity	Price	Cost of basket
Gas	100	2.88	288
Hygeine products	25	3.83	95.75
Textbooks	10	113.33	1133.3
Coffee	150	3.33	499.5
Calculators	1	111.67	1113.3

Total cost of basket= 2128.22

Year	Cost of basket	SPI	Inflation
2018	2712.83	100	-
2019	2128.22	78.45	-21.55%

Formulas used

Cost of basket= price*quantity

SPI= cost of basket in given year/cost of basket in base year

Inflation=SPI in current year- SPI in base year/ SPI in base year