Question

In the year 2010 (base year), index is 100.
In the year 2016, index is 125.
In the year 2017, index is 135.
Calculate the rate of inflation between the years 2016 and 2017.

Answer 1

To calculate the rate of inflation between the years 2016 and 2017, we need to use the following formula:

Rate of Inflation = ((Index in Year 2 - Index in Year 1) / Index in Year 1) * 100

First, let's calculate the rate of inflation between 2016 and 2017:

Rate of Inflation = ((135 - 125) / 125) * 100
Rate of Inflation = (10 / 125) * 100
Rate of Inflation = 0.08 * 100
Rate of Inflation = 8%

Therefore, the rate of inflation between the years 2016 and 2017 is 8%.