1. What is the Inflation Rate?

The inflation rate measures the percentage change in price levels over time, typically calculated using the Consumer Price Index (CPI). It shows how much prices have increased for a basket of goods and services.

2. How Does the Calculator Work?

The calculator uses the inflation rate formula:

Where:

• \( \text{CPI}_{\text{new}} \) — Current Consumer Price Index value
• \( \text{CPI}_{\text{old}} \) — Previous Consumer Price Index value

Explanation: The formula calculates the percentage change between two CPI values, showing how much prices have increased over the period.

3. Importance of Inflation Rate

Details: Inflation rate is a key economic indicator used by policymakers, businesses, and consumers to make financial decisions. It affects interest rates, wages, and investment strategies.

4. Using the Calculator

Tips: Enter both current and previous CPI values (must be positive numbers). The calculator will show the inflation rate as a percentage.

5. Frequently Asked Questions (FAQ)

Q1: What is considered a normal inflation rate?
A: Most central banks target 2-3% annual inflation. Hyperinflation occurs when rates exceed 50% per month.

Q2: How often is CPI calculated?
A: In most countries, CPI is calculated monthly by statistical agencies (e.g., BLS in the US).

Q3: What's the difference between CPI and core CPI?
A: Core CPI excludes volatile food and energy prices to show underlying inflation trends.

Q4: Can inflation be negative?
A: Yes, negative inflation is called deflation, which can be harmful to economic growth.

Q5: Why do different countries have different CPI baskets?
A: CPI reflects typical consumer spending patterns, which vary by country based on culture and economic conditions.