Here are some recent data on the U.S. consumer price index: Year CPI Year CPI Ye

Question

Here are some recent data on the U.S. consumer price index:
Year     CPI         Year    CPI          Year      CPI    

1988    118.3       1994   148.2        2000    172.2

1989    124.0        1995    152.4        2001     177.1

1990    130.7        1996    156.9        2002     179.9

1991    136.2        1997    160.5        2003     184.0

1992    140.3        1998    163.0        2004     188.9

1993    144.5        1999    166.6        2005     195.3

                                                      2006     201.8

Compute the inflation rate for each year 1989-2006 and determine which were years of inflation. In which years did deflation occur? In which years did disinflation occur? Was there hyperinflation in any year?

Explanation / Answer

The formula for calculating the Inflation Rate looks like this:

((B - A)/A)*100

So if exactly one year ago the Consumer Price Index was 178 and today the CPI is 185, then the calculations would look like this:

((185-178)/178)*100
or
(7/178)*100
or
0.0393*100
which equals 3.93% inflation over the sample year.

Here,

I1989 = (CPI1989-CPI1988)/CPI1988*100

1. In 1956, Phillip Cagan wrote The Monetary Dynamics of Hyperinflation, generally regarded as the first serious study of hyperinflation and its effects. In it, he defined hyperinflation as a monthly inflation rate of at least 50%.

2. In deflation rate would be negative

Dou you get it how to do it?  :)

Best of luck :)

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