Question

If prices increase at a monthly rate of 1.1%, by what percentage do they increase in a year, What is the annual inflation rate

Answer 1

Suppose
P0=$1
A=P(1+r)^(td)
A=1(1+0.011)^12
A=1(1.011)^12
A=$1.1403

Yearly increase will therefore be 14.03%. Hence the inflation per year is 14.03%