Consumer Price Index

Economics University

By Steven Reff and Dick Brunellehttp://apecon.us/CPI.gif

Year CPI%

Change

1983 99.6 3.2

1984 103.9 4.2

1985 107.6 3.6

1986 109.6 1.9

1987 113.6 3.6

1988 118.3 4.1

1989 124 4.8

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

Year CPI%

Change

1983 99.6 3.2

1984 103.9 4.2

1985 107.6 3.6

1986 109.6 1.9

1987 113.6 3.6

1988 118.3 4.1

1989 124 4.8

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

The CPI – Consumer Price Index

Year CPI%

Change

1983 99.6 3.2

1984 103.9 4.2

1985 107.6 3.6

1986 109.6 1.9

1987 113.6 3.6

1988 118.3 4.1

1989 124 4.8

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