The price of a first class postage stamp was 37 cents in 200

The price of a first class postage stamp was 37 cents in 2004. The cost of a first class stamp today is 49 cents. If a loaf of bread cost 98 cents in 2004, how much would you predict that it should cost today?

Solution

From the given data, let\'s calculate Consumer Price Index (CPI).

CPI is the measure of average change over the time in price paid by the consumers.

CPI = (latest index number/earliest index number)x100 = (49/37)x100 = 132.4

Therefore, Present cost of loaf of bread= 98 x (132.4/100) = 129.75 = 130 cents (approximate)