Rate of Inflation

= Percentage change in price from base year to current year

= (CPI current year- CPI base year) x 100

CPI base year

[ CPI = Consumer Price Index ]

Illustration:

Given:

Base year -2000 ; CPI based year -100

Current year -2008 ; CPI Current year = 110

To compute the rate of inflation

= (CPI current year- CPI base year) x 100

CPI base year

= 110-100 x 100

100

=10%

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