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CPI: Inflation Picks Up According to the BLS, the CPI rose 3.8% in August of this year compared to a year earlier. Food prices rose

CPI: Inflation Picks Up

According to the BLS, the CPI rose 3.8% in August of this year compared to a year earlier. Food prices rose 4.6% and clothing prices were up 4.2%, while new car prices rose 3.8%, and medical care was up 3.2%.

  1. What percentage change in the CPI up until August is accounted for by the changes in the prices of food, clothing, and medical care?
  2. Given the changes in food, clothing, and medical care, by what percentage did the prices of the other items in the CPI basket change?
  3. Why did the prices of the other items change?
  4. What is the probable impact of the change of other items in the CPI basket?

The percent change in the CPI accounted for by the price of food, clothing, and medical care is 15.7%.15.7% is derived from adding 21% (food), 10.5% (clothing), and subtracting 15.8% (medical).

Food4.6/3.8*100=121-100=21%

Clothing4.2/3.8*100=110.5-100=10.5%

New Car3.8/3.8*100=100-100=0%

Medicare3.2-3.8*100=84.2*100=-15.8%

This is the answers but, the part I do not understand is why under Medicare, why are we substracting 3.8 from 3.2 and multiplying by 100 (which does not = 84.2?) which they multiply by 100 to equal -15.8%

I know the answer is right but it makes absolutely no sense to me.....help????

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