The inflation rate is calculated by subtracting the previous year’s CPI from the current year’s CPI, dividing by the previous year’s CPI, and multiplying by 100. In this case:
"To calculate the rate of inflation over a period of time one must subtract the CPI at the beginning of the period from the CPI at the end of the period and then divide the result by the CPI at the beginning of the period. In this example, the solution can be derived as follows: (146.9 - 140.6) / 140.6."
[Reference: Chapter 3 – Economic PrinciplesLearning Domain: An Introduction to the Mutual Funds Marketplace, , , , ]
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