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Inflation Rate In economics. the inflation rate is a measure of inflation or the rate at which the consumer price index rises. It is the percentage rate of change in The level of prices over time Inflation reduces the purchasing power of a currency. resulting in an increase in prices. In The traditional economic sense. purchasing power is measured by comparing the price of a good or service to the Consumer Price Index {CPI}. Consumer Price Index {$1 The consumer price index ICPII measures changes in the general level of prices of goods and services purchased. consumer, or paid for try a reference population overtime. A consumer price index is calculated as a series of summary measures of the proportional change in the price of consumer goods and services from one period to the nexL Each summary measure is constructed as a weighted of a large number of elementary aggregate indices. The farmula for Rate of Inflation Inflation rate: {CPIE-CPI'lh'CPIl " 100 Example I:ZPI of China in December 202-0 was 111.5 and in January 2021 was 101.9 Inflation Rate= [111.5-101.9I!ll_9 " 100 =9.4296