Calculate Consumer Price Index (CPI) and Inflation Rate

What is the change in the Consumer Price Index (CPI) between 2014 and 2015?

a) The change in the Consumer Price Index (CPI) between 2014 and 2015 is 0.1035.

What is the inflation rate between these two years, according to the CPI?

b) The inflation rate between 2014 and 2015, according to the CPI, is 11.76%.

Calculate Consumer Price Index (CPI) and Inflation Rate

a) To calculate the change in the CPI between 2014 and 2015, we need to find the weighted average of the price changes for each category. By using the given information, we can calculate the weighted average price change for each category. For example:

Housing:
Price change = (210 - 200)/200 = 0.05
Weighted price change = 0.05 * 0.3 = 0.015

Transportation:
Price change = (40 - 30)/30 = 0.33
Weighted price change = 0.33 * 0.2 = 0.066

Food:
Price change = (30 - 30)/30 = 0
Weighted price change = 0 * 0.3 = 0

Entertainment:
Price change = (55 - 50)/50 = 0.1
Weighted price change = 0.1 * 0.1 = 0.01

Clothing:
Price change = (90 - 80)/80 = 0.125
Weighted price change = 0.125 * 0.1 = 0.0125

After calculating the weighted price changes in each category, we can sum them up to find the change in CPI, which is 0.1035.

b) To calculate the inflation rate, we need to divide the change in CPI by the initial CPI and multiply by 100. The initial CPI is obtained by summing up the weighted prices for each category in the base year (2014). After performing the calculations, we find that the inflation rate is 11.76%.