To calculate the Consumer Price Index (CPI):
\[ CPI = \frac{Ct}{C0} \times 100 \]
Where:
The Consumer Price Index (CPI) is a measure used to track changes in the average price of goods and services purchased by households. It helps gauge inflation by comparing the current prices of a basket of commonly bought items to their prices in a selected base period.
What is the purpose of calculating CPI inflation?
The purpose of calculating CPI inflation is to measure the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. This helps in understanding the purchasing power of a currency and the overall economic health.
Let's assume the following values:
Using the formula:
\[ CPI = \frac{1200}{1000} \times 100 = 120 \]
The Consumer Price Index (CPI) is 120.
