In: Economics
ITEM |
QUANTITY (2009) |
PRICE (2009) |
QUANTITY (2010) |
PRICE (2009) |
Bananas |
20 |
$1.00 |
15 |
$1.00 |
Cupcakes |
30 |
$1.00 |
45 |
$0.75 |
Sushi |
10 |
$10.00 |
8 |
$11.00 |
Item | Quantity year 2009 (Base year) | Price year 2009 $ | Quantity Year 2010 | Price year 2010 $ | Market basket year 2009 $ | Market basket year 2010 $ | |
Bananas | 20 | 1.00 | 15 | 1.00 | 20.00 | 20.00 | |
Cupcakes | 30 | 1.00 | 45 | 0.75 | 30.00 | 22.50 | |
Sushi | 10 | 10.00 | 8 | 11.00 | 100.00 | 110.00 | |
150.00 | 152.50 | ||||||
CPI formula | (Base year basket quantity times current year prices)/Base year basket quantities times base year prices)100 | ||||||
CPI in year 2009 (base year) is 100. | |||||||
CPI in year 2010 | |||||||
CPI=( Cost of the base year market basket in the current period/Cost of the base year market basket in the base period)x100 | |||||||
(152.50/150) | |||||||
101.67 | |||||||
Inflation rate= | |||||||
Inflation rate between 2009-2010 | |||||||
(Current period CPI-Prior period CPI)/Prior period CPI | |||||||
(101.67-100)/100=1.67%. | |||||||
a) | |||||||
Market basket in base year is quantity in 2009 times prices in 2009. | |||||||
Market basket in 2009 is base year quantity times prices in 2010. | |||||||
b) | |||||||
Market basket in 2009 is 150, CPI is 100. | |||||||
c) | |||||||
Market basket in 2010 is 152.50, CPI is 101.67. | |||||||
d) | |||||||
Inflation rate between 2009-2010 | |||||||
1.67%. | |||||||