Question

Use the following information to work Problems 8 and 9.

Consumer prices drop as falling oil costs push inflation lower Falling oil prices pushed the CPI down 0.1 percent in December 2015. Energy prices fell 2.4 percent and the price of gasoline fell by 3.9 percent.

Source: Los Angeles Times, January 20, 2016

Given the further information that the weight on energy prices in the CPI is 8 percent, by how much would the CPI have changed in December 2015 if energy prices had not changed?

Answer 1

Change in CPI = 0.092%

Step-by-step explanation:

As we know that ,

CPI - Consumer price index

As given,

CPI is fell down by 0.1%

the weight on energy prices in the CPI is 8%

If energy is not changed means energy is constant , then

Change in CPI = 0.1% - (0.1%)(8%)

= 0.001 - (0.001)(0.08)

= 0.001 - (0.00008)

= 0.00092

= 0.092%

⇒Change in CPI = 0.092%