Inflation Rate Calculator

Inflation Rate Formula:

\[ \text{Rate} = \frac{\text{New CPI} - \text{Old CPI}}{\text{Old CPI}} \times 100 \]

Inflation Rate:

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is the Inflation Rate?

The inflation rate measures the percentage change in the Consumer Price Index (CPI) over time. It indicates how much prices have increased for a basket of goods and services, reflecting the decrease in purchasing power of a currency.

2. How Does the Calculator Work?

The calculator uses the inflation rate formula:

\[ \text{Rate} = \frac{\text{New CPI} - \text{Old CPI}}{\text{Old CPI}} \times 100 \]

Where:

\( \text{New CPI} \) — Current Consumer Price Index value
\( \text{Old CPI} \) — Previous Consumer Price Index value

Explanation: The formula calculates the percentage change between two CPI values, showing how much prices have increased over the period.

3. Importance of Inflation Rate Calculation

Details: Inflation rate is a key economic indicator used by governments, central banks, investors, and businesses to make policy decisions, adjust wages, and plan investments.

4. Using the Calculator

Tips: Enter both Old CPI and New CPI values (must be greater than 0). The calculator will show the inflation rate as a percentage.

5. Frequently Asked Questions (FAQ)

Q1: What is considered a normal inflation rate?
A: Most central banks target 2-3% annual inflation. Hyperinflation occurs when rates exceed 50% per month.

Q2: How often is CPI calculated?
A: In most countries, CPI is calculated monthly by statistical agencies.

Q3: What's the difference between CPI and inflation rate?
A: CPI is an index number, while inflation rate is the percentage change in CPI over time.

Q4: Can inflation be negative?
A: Yes, negative inflation is called deflation, indicating falling prices.

Q5: What are limitations of CPI?
A: CPI may not reflect individual spending patterns and doesn't account for new products immediately.