The consumer price index for 1973 was 133.1, and for 1974 it was 147.7.  What was the inflation rate between those two years?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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In order to find the rate of inflation between these two years, we need to find the percent change in the Consumer Price Index (CPI) from 1973 to 1974.  Finding the percent change consists of finding the difference between the CPI in the two years and dividing that difference by the CPI in the first year.  We do not need to know what the base year was.  We have all the information we need in the question.  Put in the form of an equation, this is:

Inflation rate = ((CPI 1974 – CPI 1973) / CPI 1973) x 100.

Using the information that you provided in the question, we can plug in numbers:

Inflation rate = ((147.7 – 133.1) / 133.1) x 100

= (14.6 / 133.1) x 100

= .1096 x 100

= 10.96%

Rates of inflation are generally only given out to a tenth of a percent, so you might be expected to round this to 11.0%

The rate of inflation between 1973 and 1974 was 11.0% (assuming that your instructor wants you to express your answer in tenths of a percent).


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