In class, we examined Bureau of Labor Statistics (BLS) indexed CPI data for Urba

Question

In class, we examined Bureau of Labor Statistics (BLS) indexed CPI data for Urban All Items. Recall that CPI data is normally reported monthly. The index values for the seven months Jan ’17 - Jul ‘17 look like this:

Jan         242.8

Feb        243.6

Mar        243.8

Apr         244.5

May       244.7

Jun         245.0

Jul           244.8

Using these data, answer the following questions:

What was the annualized rate of price increase observed during each of the following recent periods of time:

a) The month of July?

b) the three months May-Jul?

c) The six months Feb-Jul?

Explanation / Answer

a) In july price increase is -0.2

b) = 0.3/3 = 0.1

c) =2/6 =0.33

Months CPI Inflation Jan 242.8 Feb 243.6 0.8 Mar 243.8 0.2 Apr 244.5 0.7 May 244.7 0.2 Jun 245 0.3 Jul 244.8 -0.2

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