Personal Finance & Money Asked by Rutkay Karabulak on January 8, 2021
I have data that consists of dates and monthly CPI belong to that date. And I’m trying to find Inflation belongs to specific date, for instance inflation at 2015-02.
I used this formula to calculate for example inflation rate in 2016-01
((i/l)-1)*100 = inflation rate
i = CPI value of the current month
l = CPI value from 12 month ago
( (-1,90 / -1,60) – 1 ) * 100 = 18,75
But it doesn’t make sense because result of formula is 18,75 but the real inflation rate at 2016-01 is different.
Also, for some other month I found -73,68 value from that formula, It also doesn’t make sense at all.
How can i find monthly inflation according to specific CPI value belongs to that month?
Looks like you have monthly inflation percentages, so you should compound the values, e.g.
Feb = 100. * (1 + 0.002) = 100.2
March = 100.2 * (1 + 0.006) = 100.801
month % index
2015-01 - 100
2015-02 0.2 100.2
2015-03 0.6 100.801
2015-04 0.9 101.708
2015-05 0.5 102.217
2015-06 0.3 102.524
2015-07 -0.9 101.601
2015-08 -0.3 101.296
2015-09 -0.3 100.992
2015-10 0.6 101.598
2015-11 0.4 102.005
2015-12 -0.3 101.699
2016-01 -1.9 99.7663
Then the annual inflation since Jan is 99.7663/100 - 1 = -0.23374 %
Correct answer by Chris Degnen on January 8, 2021
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