Let a price index increase from 136.2 to 140.3 to 144.5 over the course of two successive years. Average annual inflation over the period is then

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Quizplus · Accepted Answer

The average annual inflation rate over the period can be calculated using the formula for the average rate of change. The total change in the index from the beginning to the end is from 136.2 to 144.5, which is an increase of 8.3. To find the percentage increase, divide the total increase by the original index: (8.3 / 136.2) * 100. This calculation gives an approximate total percentage increase of 6.09% over two years. To find the average annual rate, divide this by 2, giving approximately 3%.

Let a Price Index Increase from 136