Enter values and click 'Calculate Inflation' to see the result.
function calculateInflation() {
var currentPeriodIndex = parseFloat(document.getElementById("currentPeriodIndex").value);
var previousPeriodIndex = parseFloat(document.getElementById("previousPeriodIndex").value);
var resultDiv = document.getElementById("result");
if (isNaN(currentPeriodIndex) || isNaN(previousPeriodIndex)) {
resultDiv.innerHTML = "Please enter valid numbers for both price index values.";
resultDiv.className = "result error";
return;
}
if (previousPeriodIndex === 0) {
resultDiv.innerHTML = "The Previous Period Price Index Value cannot be zero.";
resultDiv.className = "result error";
return;
}
var inflationRate = ((currentPeriodIndex – previousPeriodIndex) / previousPeriodIndex) * 100;
if (inflationRate > 0) {
resultDiv.innerHTML = "The Inflation Rate is: " + inflationRate.toFixed(2) + "%";
resultDiv.className = "result";
} else if (inflationRate < 0) {
resultDiv.innerHTML = "The Deflation Rate is: " + Math.abs(inflationRate).toFixed(2) + "%";
resultDiv.className = "result";
} else {
resultDiv.innerHTML = "There is no inflation or deflation (0.00%).";
resultDiv.className = "result";
}
}
Understanding How Inflation is Calculated
Inflation is a critical economic indicator that measures the rate at which the general level of prices for goods and services is rising, and consequently, the purchasing power of currency is falling. When inflation occurs, each unit of currency buys fewer goods and services than it could before.
The most common way to calculate inflation is by using a price index, such as the Consumer Price Index (CPI) or the Producer Price Index (PPI). These indices track the average change over time in the prices paid by urban consumers or producers for a market basket of consumer goods and services.
The Inflation Rate Formula
The basic formula to calculate the inflation rate between two periods is as follows:
Inflation Rate = ((Current Period Price Index - Previous Period Price Index) / Previous Period Price Index) * 100
Current Period Price Index: This is the value of the price index for the most recent period (e.g., current month, current year).
Previous Period Price Index: This is the value of the price index for the earlier period you are comparing against (e.g., same month last year, previous quarter).
Example Calculation
Let's consider a practical example using hypothetical CPI values:
Suppose the CPI for January 2023 (Previous Period) was 290.00.
Suppose the CPI for January 2024 (Current Period) was 300.00.