How is the inflation rate calculated

The formula for calculating the inflation rate is to subtract the past Consumer Price Index (CPI) from the current CPI, then divide that difference by the past CPI and multiply by 100 to get the inflation rate. This formula allows economists and policymakers to track changes in the cost of living and make informed decisions about monetary policy. By comparing the current CPI to the past CPI, it provides a clear measure of how much prices have increased over a specific period of time. This formula is an essential tool for understanding and managing inflation in an economy.