Content

• Steps
• Method 1 of 2: Single Subject
• Method 2 of 2: Multiple Items
• What do you need

The consumer price index (CPI) is a measure of changes in the price of a product over time. It requires census data, consumer surveys, and product ratings by importance. To calculate a simple CPI, you only need a reference period, a new period, and the cost of consumer goods. Our guide will help you understand how inflation affects your day-to-day expenses.

Steps

Method 1 of 2: Single Subject

1. 1 Choose an item you've recently bought. Try to find a recently purchased item whose price you remember exactly. This product will be your CPI. Record the price and CPI. The starting CPI is always 100:
   • Price 1: 1.50
   • CPI 1: 100 (1.50 / 1.50 x 100)
2. 2 Write down the new price. This is the price you've paid for the same item recently:
   • Price 2: 1.75
3. 3 Calculate the new CPI. Divide the second price by the first and multiply by 100:
   • 1.75 / 1.50 x 100 = 116.6
   • CPI 2: 116.6
4. 4 Subtract CPI 1 from CPI 2. You will receive a percentage change in price since the purchase of the product. If the number is above zero, then we can talk about inflation, and if it is negative - about deflation:
   • 116.6 - 100 = 16.6% inflation

Method 2 of 2: Multiple Items

1. 1 Pick a few items you've bought in the past. Take items purchased around the same time and make sure to buy them again recently. Record the price you paid for each item and the CPI, which is always 100. Then add up the prices:
   • Price 1: 3.25, 3.00, 0.75
   • Price 1: 3.25 + 3.00 + 0.75 = 7.00
   • CPI 1: 100 (7.00 / 7.00 x 100)
2. 2 Write down the new prices. These are the prices you are currently paying for the exact same items. Add up the prices obtained:
   • Price 2: 4.00, 3.25, 1.25
   • Price 2: 4.00 + 3.25 + 1.25 = 8.50
3. 3 Calculate the new CPI. Divide the second price by the first and multiply by 100:
   • 8.50 / 7.00 x 100 = 121
   • CPI: 121
4. 4 Subtract CPI 1 from CPI 2. You will receive a percentage change in price since the purchase of the products. The more products and prices you can analyze, the more accurate your understanding of what is happening in the economy will be.
   • 121 - 100 = 21% inflation

What do you need

• Notebook
• Calculator
• Pen or pencil
• Receipts for selected products from two periods (for example, now and a year ago)