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The table below shows six years of hypothetical CPI values for the United States. Using the information in the table, compute the annual inflation rate. Instructions: Round your answers to two decimal places.  CPI Values and Inflation Year CPI Inflation Rate (percent)2009 214.54 —2010 218.06 %2011 224.94 2012 229.59 2013 232.96 2014 236.74

Question

The table below shows six years of hypothetical CPI values for the United States. Using the information in the table, compute the annual inflation rate. Instructions: Round your answers to two decimal places.  CPI Values and Inflation Year CPI Inflation Rate (percent)2009 214.54 —2010 218.06 %2011 224.94 2012 229.59 2013 232.96 2014 236.74

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Solution

The inflation rate is calculated by finding the percentage change in the Consumer Price Index (CPI) from one year to the next.

Here's how to calculate it:

  1. Subtract the CPI of the previous year from the CPI of the current year.
  2. Divide the result by the CPI of the previous year.
  3. Multiply the result by 100 to get the percentage.

Let's calculate the inflation rate for each year:

For 2010: (218.06 - 214.54) / 214.54 * 100 = 1.64 %

For 2011: (224.94 - 218.06) / 218.06 * 100 = 3.16 %

For 2012: (229.59 - 224.94) / 224.94 * 100 = 2.07 %

For 2013: (232.96 - 229.59) / 229.59 * 100 = 1.47 %

For 2014: (236.74 - 232.96) / 232.96 * 100 = 1.62 %

So, the inflation rates for the years 2010, 2011, 2012, 2013, and 2014 are approximately 1.64%, 3.16%, 2.07%, 1.47%, and 1.62% respectively.

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