CPI Calculations

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					      CPI Calculations

    By: Professor Jermaine Whirl
For Students of East Georgia College
                   CPI
• CPI= Expenditures in the Current year
  divided by Expenditures in the base year *
  100.
• In 2008 ($900/750)*100=120
• In 2009 ($915/750)* 100=122
 Calculating Inflation Based of CPI
• 2008 Index was 120
• 2009 Index was 122
• (122-120)/120* 100= and Inflation Rate of
  1.7%
• This tells us that prices increased 1.7% between
  this time period.
• Remember the equation (New CPI-Old CPI)/
  Old CPI * 100= Inflation Rate.
     Calculation of Prices in today's dollars
            compared to past years.
•   2% milk $1.59 a gallon Iowa 1987
•   Bunk Beds with Mattress $148
•   Pontiac Grand 1980 AM $9,965
•   Cheer Laundry Detergent $1.59
•   Gallon on Gas $1.19 1989
•   Nike Air Force Shoes 1985- $54.90
Year CPI
  2007 208.3
  2006 201.6
            Inf. Rate
                (July)
                  3.2
                         CPI Data
                            Year     CPI      Inf. Rate

  2005 195.3      3.4
  2004 188.9      2.7                       Example:
  2003 184.0      2.3
  2002 179.9      1.4       What is the price of 2% milk in today's
  2001 177.5      2.9
  2000 172.5      3.5                       prices?
  1999 166.6      2.1
  1998 163.1      1.6       Product is 2% Milk in 1987; Cost $1.59
  1997 160.5      2.3
  1996 156.9      3.0       Equation is CPI of Current Year/ CPI of
  1995 152.4      2.8       Base Year * the Price of the product in
  1994 148.2      2.6
  1993 144.5      3.0                     question.
  1992 140.3      3.0
  1991 136.2      4.2
  1990 130.7      5.4
  1989 124.0      4.8       CPI in 2007 is 208.3; CPI in 1987 is 113.6
  1988 118.3      4.1
  1987 113.6      3.6                Therefore we'll divide
  1986 109.6      1.9
  1985 107.6      3.6                 (208.3 / 113.6) * 1.59
  1984 103.9      4.3
  1983   99.6     3.2          Price of milk today for this same
  1982   96.5     6.2              product would be $2.91
  1981   90.9    10.3
  1980   82.4    13.5

				
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