Suppose the spot and threemonth forward rates for the yen ar

Suppose the spot and three-month forward rates for the yen are

Suppose the spot and three-month forward rates for the yen are 79.90 and 79.20, respectively.

What would you estimate is the difference between the annual inflation rates of the United States and Japan?

Difference between the annual inflation rates of the United States and Japan = (79.20/79.90)^(12/3) -1

Difference between the annual inflation rates of the United States and Japan = 3.46%