5. CPI and Inflation

In country X a typical family of four buys an average of 183 loaves of bread and 91 sticks of butter each year. Concerned about increase in price of these essential goods the head of the family decides to create a price index of these goods. The prices of these items are given in the accompanying table.

		2019	2020
2018
Base year
183 Loaves of bread	$1.55	$1.89	$2.40
91 sticks of butter	$4.00	$4.30	$4.90

a. Using 2018 as a base year, calculate the CPIs for these items for each year?

2018: CPI ______________

2019: CPI ______________

2020: CPI ______________

b. Calculate the inflation rate between years 2019 and 2020?