Calculating inflation

# Calculating inflation - .Thechangein situation....

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Calculating inflation  Inflation is the change in the price level from one year to the next. The change in  inflation can be calculated by using whatever price index is most applicable to the given  situation. The two most common price indices used in calculating inflation are CPI and  the GDP deflator. Know, though, that the inflation rates derived from different price  indices will themselves be different.  Calculating Inflation Using CPI  The price level most commonly used in the United States is the CPI, or consumer price  index. Thus, the simplest and most common method of calculating inflation is to  calculate the percentage change in the CPI from one year to the next. The CPI is  calculated using a fixed basket of goods and services; the percentage change in the

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