Question

If the Consumer Price Index changes from 120 in year one to 150 in year two, the rate of inflation is

Answer 1

Rate of inflation is 25%

Step-by-step explanation:

Inflation rate is measured as the change in price. It is calculated as below:

(New CPI - Old CPI) * 100

Old CPI

Thus, the calculation would be:

(150 - 120) * 100

120

= (30/120) * 100

= 25%

Hope this helps!