What Is Used To Calculate Inflation

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Learn what is used to calculate inflation and how prices change over time.

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\n \n \n The starting value of the index (e.g., CPI in a base year).\n

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\n \n \n The ending value of the index.\n

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How Inflation is Calculated

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Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. Central banks use various methods to calculate it, but the most common method involves the Consumer Price Index (CPI).

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Example Calculation

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Suppose the CPI in 2020 was 100, and in 2024, it is 150. This means that, on average, prices have increased by 50% over those four years.

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Year	CPI Index
2020	100
2024	150

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