The Inflation Rate
The inflation rate measures the rate of increase of the corresponding price index and is usually stated as an annual percentage (for example, 2.3%). Again, the deflation rate is the negative of the inflation rate, 4.5% deflation is the same as –4.5% inflation.
SINGLE-YEAR ANNUAL INFLATION RATE
The inflation rate in any single year can be calculated by dividing the difference between the price index at the end of that year and beginning of that year (which is the price index at the end of the previous year) by the price index at the beginning of that year, as follows:
Table 13.1 shows the Consumer Price Index (which is graphed ...
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