Here are values of the CPI (multiplied by 100) for each year from 1990 to 2000.
ID: 1167557 • Letter: H
Question
Here are values of the CPI (multiplied by 100) for each year from 1990 to 2000. For each year beginning with 1991, calculate the rate of inflation from the previous year.
Instructions: Enter your responses rounded to one decimal place.
Year
CPI
Inflation Rate (%)
1990
130.7
—
1991
136.2
1992
140.3
1993
144.5
1994
148.2
1995
152.4
1996
156.9
1997
160.5
1998
163.0
1999
166.6
2000
172.2
What happened to inflation rates over the 1990s?
Compared to 1990–1991, inflation rates remained (Click to select)
a.lower
b.higher
c.the same throughout the 1990s.
Year
CPI
Inflation Rate (%)
1990
130.7
—
1991
136.2
1992
140.3
1993
144.5
1994
148.2
1995
152.4
1996
156.9
1997
160.5
1998
163.0
1999
166.6
2000
172.2
Explanation / Answer
As we know, inflation rate is calculated by the following formula:
{(Current CPI – Last year’s CPI) / Last year’s CPI} * 100
So, using the above formula, we have the following inflation rates.
Year
CPI
Inflation Rate (%)
1990
131
—
1991
136
4.21
1992
140
3.01
1993
145
2.99
1994
148
2.56
1995
152
2.83
1996
157
2.95
1997
161
2.29
1998
163
1.56
1999
167
2.21
2000
172
3.36
As we can observe, when compared to the inflation rate of 1990-1991 (4.21%) the inflation rate has decreased till the end of the decade and started rising again.
The correct answer is option A = Lower.
I hope my solution solves your query.
Year
CPI
Inflation Rate (%)
1990
131
—
1991
136
4.21
1992
140
3.01
1993
145
2.99
1994
148
2.56
1995
152
2.83
1996
157
2.95
1997
161
2.29
1998
163
1.56
1999
167
2.21
2000
172
3.36
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