Final answer:
The rate of inflation from 2015 to 2016 is calculated using the Consumer Price Index (CPI) values for each year. By applying the formula for inflation, the calculated rate of inflation over this period is found to be 25%.
Step-by-step explanation:
The rate of inflation over the period from 2015 to 2016 can be calculated using the Consumer Price Index (CPI) values for those years, which are 120 for 2015 and 150 for 2016, respectively. We calculate the rate of inflation using the formula:
Rate of Inflation = ((CPI in 2016 - CPI in 2015) / CPI in 2015) × 100%
Substituting the given values:
Rate of Inflation = ((150 - 120) / 120) × 100%
Rate of Inflation = (30 / 120) × 100%
Rate of Inflation = 0.25 × 100%
Rate of Inflation = 25%
This method demonstrates how to use CPI values to find the percentage change in the cost of living, which reflects the inflation rate for the period in question. It's important to note that a simple numerical increase in the index does not equate to a constant rate of inflation, as the rate is relative to the prior period's index value.