Calculate the salary link relatives and cpi link

Reference no: EM13990239

The following table shows the average annual salary package of chartered accountants with three years' work experience, and the consumer price index (CPI) for the period 2005 to 2011. The base year for CPI is 2006 (i.e. CPI = 100).

(a) Use the consumer price index (CPI) to calculate the real annual salary package of chartered accountants for each of the years.

(b) Based on the answer to (a), discuss whether chartered accountants' salary packages have kept pace with 'headline' inflation (CPI) relative to the base period.

(c) Calculate the salary link relatives and CPI link relatives and determine whether salary adjustments have maintained the real purchasing power of chartered accountants' incomes on a year-on-year basis

Accountants' salaries (annual)
Year	Salary package (R1 000s)	CPI
2005	387	95
2006	406	100
2007	422	104
2008	448	111
2009	466	121
2010	496	126
2011	510	133

Reference no: EM13990239

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