1. What is Inflation Rate?

The inflation rate measures the percentage change in price levels over time, typically calculated using the Consumer Price Index (CPI). It indicates 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 measured period.

3. Importance of Inflation Rate

Details: Inflation rate is a key economic indicator used by governments, central banks, and investors to make policy decisions, adjust interest rates, and evaluate economic health.

4. Using the Calculator

Tips: Enter both CPI values (current and previous) as positive numbers. The calculator will show the percentage change between them.

5. Frequently Asked Questions (FAQ)

Q1: What is considered a "normal" inflation rate?
A: Most central banks target 2-3% annual inflation as healthy for economic growth.

Q2: What's the difference between CPI and inflation rate?
A: CPI is an index number, while inflation rate is the percentage change in CPI over time.

Q3: How often is CPI measured?
A: In most countries, CPI is calculated monthly and published by government statistical agencies.

Q4: Can inflation be negative?
A: Yes, negative inflation is called deflation, indicating falling prices.

Q5: What causes inflation?
A: Main causes include increased money supply, rising production costs, and strong consumer demand.