Please provide a guided answer or a brief explanation your h

Please provide a guided answer or a brief explanation, your help is very appreciated.

Price level in the previous year was 150%, while this year CPI is 170%. Calculate inflation rate.

Solution

CPI determines the price level in an economy as compared to the base year. The inflation rate is calculated by the % change in the CPI.

So, Inflation rate = (CPI in Year 2 - CPI in Year 1) / CPI in Year 1 * 100 = (170 - 150) / 150 * 100 = 20/150 * 100 = 20/3 * 2 = 40/3 = 13.33%

So, the inflation rate is = 13.33%