1. Consumer Price Index Economics University By Steven Reff and Dick Brunelle http://apecon.us/CPI.gif

2. YearCPI % Change 198399.63.2 1984103.94.2 1985107.63.6 1986109.61.9 1987113.63.6 1988118.34.1 19891244.8 The CPI is published by the Bureau of Labor and Statistics each month. The base year is always = 100 As you can tell by this chart the base year is in the beginning of 1984 The CPI – Consumer Price Index

3. YearCPI % Change 198399.63.2 1984103.94.2 1985107.63.6 1986109.61.9 1987113.63.6 1988118.34.1 19891244.8 The CPI – Consumer Price Index Now look at the years 1986 and 1987. Notice that the increase in the CPI is 4 points, yet the percent increase form 1986 to 1987 is 3.6 Why? 4

4. The CPI – Consumer Price Index YearCPI % Change 198399.63.2 1984103.94.2 1985107.63.6 1986109.61.9 1987113.63.6 1988118.34.1 19891244.8 Take the two consecutive years CPI – find the difference. 113.6 - 109.6 = 4 Now, divide the 4 by the original year’s CPI 109.6 / 4 =.0364 Finally, times.0364 by 100 = 3.64