Question

In 2008 the price index was calculated at 165.2 with 2005 as the base year. In 2009 the price index increased to 181.6. What was the inflation from 2008-2009?

A) 9%
B) 81.6%
C) 65.2%
D) 9.9%

Answer 1

The inflation rate from 2008 to 2009, based on the price index increase from 165.2 to 181.6, is calculated to be approximately 9.9%, corresponding to answer choice D.

Step-by-step explanation:

The inflation from 2008 to 2009 is calculated by taking the percentage change in the price index over that period. According to the formula for calculating inflation rate based on the price index numbers, we use the following calculation:

Inflation Rate = (New Price Index - Old Price Index) / Old Price Index x 100%

Thus, for the years 2008 to 2009:

Inflation Rate = (181.6 - 165.2) / 165.2 x 100% = (16.4 / 165.2) x 100% = 0.0992 = 9.92%

When rounded to the nearest tenth, the inflation rate is approximately 9.9%, which corresponds to answer choice D.