Please enter valid numeric CPI values. The starting CPI must be greater than zero.
CPI Point Change:0.0
Inflation Rate:0.00%
Interpretation:No change
function calculateInflationRate() {
var startCPI = parseFloat(document.getElementById('start_cpi_index').value);
var endCPI = parseFloat(document.getElementById('end_cpi_index').value);
var resultDisplay = document.getElementById('cpi-result-display');
var errorMsg = document.getElementById('cpi-error-msg');
// Reset display
resultDisplay.style.display = 'none';
errorMsg.style.display = 'none';
// Validation
if (isNaN(startCPI) || isNaN(endCPI) || startCPI 0) {
interpretationText = "Prices have increased (Inflation)";
} else if (inflationPercentage < 0) {
interpretationText = "Prices have decreased (Deflation)";
} else {
interpretationText = "Prices have remained stable";
}
// Update DOM
document.getElementById('res-point-change').innerText = pointChange.toFixed(3);
document.getElementById('res-inflation-rate').innerText = inflationPercentage.toFixed(2) + "%";
document.getElementById('res-interpretation').innerText = interpretationText;
// Show result
resultDisplay.style.display = 'block';
}
How to Calculate Inflation Rate Using CPI
Understanding how inflation impacts the economy starts with the Consumer Price Index (CPI). The CPI represents the weighted average price of a "basket" of consumer goods and services, such as transportation, food, and medical care. By comparing the CPI of two different time periods, you can determine the rate of inflation (or deflation) over that duration.
This calculator allows you to input index values from any source (such as the Bureau of Labor Statistics in the US or the Office for National Statistics in the UK) to instantly derive the percentage change.
The Inflation Rate Formula
The mathematical formula to calculate the inflation rate between two periods is relatively straightforward. It is a percentage change formula applied to index numbers.
Current CPI: The index value for the later date (the end of the period).
Previous CPI: The index value for the earlier date (the start of the period).
Example Calculation
Let's illustrate this with a practical example. Suppose you want to calculate the inflation rate between the year 2020 and 2023.
Step 1: Find the CPI for the starting period. Let's assume the CPI in 2020 was 258.81.
Step 2: Find the CPI for the ending period. Let's assume the CPI in 2023 was 304.70.
Step 3: Calculate the difference: 304.70 – 258.81 = 45.89.
Step 4: Divide the difference by the starting CPI: 45.89 ÷ 258.81 = 0.1773.
Step 5: Multiply by 100 to get the percentage: 0.1773 × 100 = 17.73%.
In this scenario, the total inflation over that three-year period was 17.73%.
Why is CPI Used?
The Consumer Price Index is the most widely used measure of inflation because it directly reflects the cost of living for typical households. It is used by governments to adjust income eligibility levels for government assistance, federal tax brackets, and Cost-of-Living Adjustments (COLAs) for Social Security payments. By tracking the CPI, economists can gauge the purchasing power of a currency.
Negative Inflation (Deflation)
If the calculation results in a negative number, this indicates deflation. This means that the general price level of goods and services has fallen. For example, if the CPI drops from 100 to 98, the calculation would be ((98 – 100) / 100) × 100 = -2%. This indicates a 2% deflation rate.