How is the inflation rate calculated
The inflation rate is a measurement of the rise in prices of goods and services over a given period of time. Inflation is also stated as the decline in purchasing power over a period of time.FactsThe inflation rate is always stated as a percentage. Changes in the rate could signal weakness in the economy.Consumer Price IndexOne of the most widely used price gauges is the Consumer Price Index (CPI). Each month, the Bureau of Labor Statistics measures the average price of a basket of goods and services needed by consumers.Other IndicesSeveral other indices are also important for determining inflationary pressures. An example is the Core Price Index, which removes volatiles like oil and food from CPI.FormulaThe inflation rate calculation subtracts the price that existed in the last period from the price that exists today, multiplies that sum by 100 and divides the result by the price that existed last period.ExampleIf a basket of goods and services costs $135 today and $132 last month, th
