Here are some recent data on the US consumer price index: Year CPI Year CPI Year

Question

Here are some recent data on the US 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 inflation? In which years did deflation occur? In which years did disinflation occur? Was there hyperinflation in any year?

Explanation / Answer

to get the inflation we calculate CPI(new)/CPI(old) -1 89: 4.82% 96: 2.95% 03: 2.28% 90: 5.40% 97: 2.29% 04: 2.66% 91: 4.21% 98: 1.56% 05: 3.39% 92: 3.01% 99: 2.21% 06: 3.33% 93: 2.99% 00: 3.36% 94: 2.56% 01: 2.85% 95: 2.83% 02: 1.58% In all years there was inflation. Deflation did not occur in any year. Also, hyperinflation, which is defined as inflation at a rate above 13,000%, did not occur. Disinflation, which is basically a reduction in the inflation rate is observed in some years: 91, 92, 93, 94, 97, 98, 01, 02, 06

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