Question

if a basket of goods and services cost R100 in 2003, how much would this basket cost you in 2004 if the inflation rate is 5%?

Answer 1

To calculate the cost of the basket in 2004 after a 5% inflation rate, you would use the following formula:

Cost in 2004 = Cost in 2003 + (Inflation Rate x Cost in 2003)
Cost in 2004 = R100 + (0.05 x R100)
Cost in 2004 = R100 + R5
Cost in 2004 = R105

Therefore, the basket of goods and services would cost you R105 in 2004 after a 5% inflation rate.