If prices increase at a monthly rate of 1.1%, by what percentage do they increase in a year, What is the annual inflation rate

Question

Mathematics

Mckinley Hines

25 October, 08:19

If prices increase at a monthly rate of 1.1%, by what percentage do they increase in a year, What is the annual inflation rate

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Answers (1)

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Bailey · Answer 1

Suppose

P0=$1

A=P (1+r) ^ (td)

A=1 (1+0.011) ^12

A=1 (1.011) ^12

A=$1.1403

Yearly increase will therefore be 14.03%. Hence the inflation per year is 14.03%