If the consumer price index was 100 in the base year and 106 in the following year, then the inflation rate was

Question

a. 1.06 percent.
b. 6 percent.
c. 106 percent.
d. 10.6 percent.

Answer 1

To calculate the inflation rate based on the Consumer Price Index (CPI), you can use the following formula:

\[ \text{Inflation Rate} = \frac{\text{CPI in current year} - \text{CPI in base year}}{\text{CPI in base year}} \times 100 \]

In your case, the CPI in the base year is 100, and the CPI in the following year is 106. Plugging these values into the formula:

\[ \text{Inflation Rate} = \frac{106 - 100}{100} \times 100 = \frac{6}{100} \times 100 = 6% \]

Therefore, the correct answer is:

b. 6 percent.