If the consumer price index falls from 1.40 to 1.35 in a year, what is the deflation rate?

Question

Quizplus · Accepted Answer

The formula to calculate deflation rate is: 
Deflation rate = ((CPI in the previous year - CPI in the current year) / CPI in the previous year) x 100%
Using this formula, we can calculate the deflation rate as follows:
Deflation rate = ((1.40 - 1.35) / 1.40) x 100%
= (0.05 / 1.40) x 100%
= 0.0357 x 100%
= 3.57%
Therefore, the correct answer is B, which is 3.57%.

If the Consumer Price Index Falls from 1