CPI and Inflation

Fill in blanks in table below and complete calculation

		Year 1 (2000)	Year 2 (2003)	Year 3 (2006)
Market Basket Items	# of Units	$ per unit Total Cost	$ per unit Total Cost	$ per unit Total Cost
beef	3 lbs	$2.00 $6.00	$3.00	$2.75
shirts	5	$10.00	$9.75	$10.50
gasoline	20 gallons	$4.00	$4.50	$4.50
Total Cost of Basket		$ --------	$----------	$-------

(a)Using year 1(2000) as our base year and using the formula from the textbook, calculate the Consumer price index for each year.

(b) Calculate the inflation rate on a percentage basis for the following:

Year 1 to Year 2

Year 1 to Year 3

Year 2 to Year 3

Hint: formula = [(Ending index - Beginning index) / Beginning Index] X 100: