How do they calculate inflation?

Inflation of a product can be found by using the formula: (New$ – Old$)/ Old$ X 100. This would give you the inflation rate. This is the rate that it increased in that period of time.  This formula can be used for one product. When economists want the inflation rate of the whole economy , they use the CPI formula.

An example of finding the inflation for a product is for bacon among the years 1903 – 2013. This is the inflation.

photoYear, Price/lb

1903, $00.135

1913, $00.22

1923, $00.15

1953, $00.73

1963, $00.49

1973, $1.19

1983, $1.89

1993, $00.99

2013, $6.99

This was the inflation rate between:

1913 and 1923

(15-22/22)100= 31.8%

1973 and 1983

(1.89-1.19/1.19)100= 58.8%

1993 and 2013

(6.99-.99/.99)100= 606.06%

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