wikiHow Inflation Calculator Inflation is calculated as the percentage increase in the general price level of goods and services in an economy over a period of time. It is commonly measured using the Consumer Price Index (CPI), which tracks the changes in the prices of a basket of goods and services commonly purchased by households. To calculate inflation using the CPI, you can use the following formula: Inflation Rate = (CPI in Current Year - CPI in Previous Year) / CPI in Previous Year x 100 Here are the steps to calculate inflation using the CPI: 1. Determine the CPI for the current year. This is the average price level of the basket of goods and services in the current year. 2. Determine the CPI for the previous year. This is the average price level of the same basket of goods and services in the previous year. 3. Subtract the CPI for the previous year from the CPI for the current year. 4. Divide the result by the CPI for the previous year. 5. Multiply the result by 100 to convert it into a percentage. For example, if the CPI for the current year is 120 and the CPI for the previous year is 100, the inflation rate would be calculated as follows: Inflation Rate = (120 - 100) / 100 x 100 Inflation Rate = 20% This means that the general price level of goods and services has increased by 20% over the past year. Note that inflation can be calculated using different time periods, such as monthly, quarterly, or annually. The time period used will depend on the data available and the purpose of the analysis. Page