The rate of inflation is the rate of change of general price level whi

The rate of inflation is the rate of change of general price level which is measured as

Rate of inflation (year x) = Price level (year x) – Price level (year x – 1) / Price level (year x – 1) × 100
Rate of inflation (year x) = Price level (year x) – Price level (year x + 1) / Price level (year x + 1) × 100
Rate of inflation (year x) = Price level (year x) + Price level (year x – 1) / Price level (year x – 1) × 100
Rate of inflation (year x) = Price level (year x) + Price level (year x + 1) / Price level (year x + 1) × 100
This question was previously asked in
UPSC SO-Steno – 2018
The rate of inflation (year x) is measured as (Price level (year x) – Price level (year x – 1)) / Price level (year x – 1) × 100.
Inflation rate is defined as the percentage change in the general price level over a period. The standard formula for calculating the percentage change between two values (in this case, price levels in year x and year x-1) is (New Value – Old Value) / Old Value * 100. Applying this to price levels, where the “old value” is the price level in the base year (year x-1) and the “new value” is the price level in the current year (year x), yields the formula in option A.
Price level can be represented by indices like the Consumer Price Index (CPI) or the Wholesale Price Index (WPI). The formula calculates the annual inflation rate if year x and year x-1 are consecutive years.
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