Question

At the end of 2015 the uk consumer price index was 258; at the end of 2016 it was 267. according to this information, the annual rate of inflation during 2016 was approximately:

A. 3.5 percent.
B. 9 percent.
C. 2.67 percent.
D. 0.35 percent.

Answer 1

The annual rate of inflation in the UK during 2016 was calculated to be approximately 3.5 percent by using the Consumer Price Index values from the end of 2015 and 2016.

Step-by-step explanation:

To calculate the annual rate of inflation for the UK during 2016 using the Consumer Price Index (CPI), you take the difference between the CPI at the end of 2016 and the CPI at the end of 2015, then divide that by the CPI at the end of 2015, and finally multiply by 100 to convert it into a percentage. The given CPI for the end of 2015 is 258, and for the end of 2016 it is 267. Applying this formula:

Inflation Rate = ((CPI in 2016 - CPI in 2015) / CPI in 2015) × 100%

Inflation Rate = ((267 - 258) / 258) × 100%

Inflation Rate = (9 / 258) × 100%

Inflation Rate ≈ 3.49%

Therefore, rounding to the nearest decimal place, the annual rate of inflation during 2016 was approximately 3.5 percent, which corresponds to option A.