AP MacroeconomicsUnemployment & Inflation
Inflation Rate
Inflation rate is the percentage change in CPI.
The inflation rate is the percentage change in the CPI over a period of time, usually a year. It is calculated by comparing the current CPI to the CPI in a previous period. The inflation rate is an important economic indicator, as it helps to measure the rate at which prices are rising or falling. A high inflation rate can have negative effects on the economy, while a low inflation rate can be beneficial for economic growth and stability.
Formula / Example
(CPI2 - CPI1) / CPI1 * 100