Inflation rate calculator (via CPI)
Definition – What is the inflation rate?
The inflation rate is the rate that the consumer price index (CPI) is increasing. It is listed as a percentage.
As the price level of goods and services change over time, the CPI tracks the changes in prices.
A high inflation rate (considered to be more than 2%) means that prices are going up quickly, a low inflation rate (considered to be between 0 and 2%) means that prices are going up slowly. A negative inflation rate means that prices are going down.
Formula – How to calculate the inflation rate
Inflation Rate = ((Current Year’s CPI – Last Year’s CPI) ÷ Last Year’s CPI) x 100
If the current year’s CPI is 108 and last year’s CPI is 104, then:
Inflation Rate = (108 – 104) ÷ 104 = 4 ÷ 104 = 0.0385
Therefore, the inflation rate is 0.0385, or 3.85%
Sources and more resources
- Wikipedia – Inflation – Wikipedia’s article on inflation. Includes information on how to calculate the inflation rate.
- Khan Academy – Introduction to Inflation – An introduction to inflation and the consumer price index (CPI).
- OECD – Inflation Data – Inflations rates by country.
- US Bureau of Labor Statistics – Consumer Price Index – Data on the consumer price index in the U.S..