In 1989, the CPI was 124.0 in 1990, it was 130.7 What was the rate of inflation over this period ?
Correct answer: A. 5.4 percent
- A. 5.4 percent
- B. 30.7 percent
- C. You can't tell without knowing the base year
- D. 5.1 percent
Explanation
Inflation is calculated as the change in CPI divided by the earlier CPI: (130.7 − 124.0) ÷ 124.0 × 100, which is about 5.4%. The base year is unnecessary because both CPI values are given.
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