Understanding Inflation Rate
Inflation refers to the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. It's a key economic indicator that affects consumers, businesses, and governments.
The most common way to calculate the inflation rate is by comparing the Consumer Price Index (CPI) between two periods. However, for a simpler calculation of price change over time, we can use the following formula:
Inflation Rate (%) = ((Current Price – Previous Price) / Previous Price) * 100
Where:
- Previous Price: The price of a good or service at an earlier point in time.
- Current Price: The price of the same good or service at a later point in time.
A positive inflation rate means prices have increased, while a negative rate (deflation) means prices have decreased. Understanding inflation helps you make informed decisions about saving, investing, and budgeting.
Example Calculation:
Let's say a basket of goods cost $100.00 last year (previous price) and the same basket now costs $103.00 (current price). To calculate the inflation rate:
Inflation Rate = (($103.00 – $100.00) / $100.00) * 100
Inflation Rate = ($3.00 / $100.00) * 100
Inflation Rate = 0.03 * 100
Inflation Rate = 3%
This means there has been a 3% inflation over the period.
function calculateInflation() {
var previousPrice = parseFloat(document.getElementById("previousPrice").value);
var currentPrice = parseFloat(document.getElementById("currentPrice").value);
var resultDiv = document.getElementById("result");
if (isNaN(previousPrice) || isNaN(currentPrice) || previousPrice <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for both prices.";
return;
}
var inflationRate = ((currentPrice – previousPrice) / previousPrice) * 100;
resultDiv.innerHTML = "
Inflation Rate:
" + inflationRate.toFixed(2) + "%";
}
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