CPI and Inflation

In country X a typical family of four buys an average of 177 loaves of bread and 63 sticks of butter each year. Concerned about increase in price of these essential goods the head of the family decides to make an index of these goods. The prices of these items are given in the accompanying table.

177 loaves of bread

2018 (base year) $1.35

2019 $1.47

2020 $1.82

63 sticks of butter

2018 $3.80

2019 $4.20

2020 $ 5.99

a. Using 2018 as a base year, create a CPI for these items for each year.

2018: CPI ______________

2019: CPI ______________

2020: CPI ______________

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