Calculate the annual inflation rate over the period

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Reference no: EM13237394

There are three goods in the consumer basket. The fixed quantities are these goods, which the consumer buys, are as follows: Food=60 units, Movies=40 units, and Clothing=90 units. Over a four-year period, the prices of these goods, PF, PM and PC (in dollars) are given below:
Year Price of Food (PF) Price of Movies (PM) Price of Clothing (PC)
1991 15 14 25
1992 16 15 26
1993 17 16 30
1994 20 17 32
Assume that 1992 is the base year.

1) Calculate the Consumer Price Index for each of the four years.

2) Calculate the annual inflation rate over the period, starting with 1992, compared to the year before.

Reference no: EM13237394

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