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

Question

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

Answer 1

To calculate the inflation rate, you can use the formula:

\[ \text{Inflation Rate} = \left( \frac{\text{CPI in Current Year} - \text{CPI in Base Year}}{\text{CPI in Base Year}} \right) \times 100 \]

Given:

• CPI in Base Year = 100
• CPI in Following Year = 106

Using the formula:

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

Therefore, the correct answer is d. 6 percent.