The inflation factor measures the change in the cost of common consumer products over a specified period of time. The United States Bureau of Labor Statistics gathers samplings of costs of items that are part of a "market basket" by first identifying the exact product type and size, then choosing a location to track the price as it changes over time. The Bureau of Labor Statistics then uses statistical samplings of the price changes of all the products in the market basket in order to create the consumer price index (CPI) for that month. Businesses and consumers can then use the consumer price index figures to calculate the inflation factor.
Instructions
1. Obtain the consumer price index figures for the two months you wish to compare. For example, if you want to calculate the inflation factor from January to February, obtain the CPI index figures for those two months. The CPI index figures are available on the Bureau of Labor Statistics website.
2. Subtract the most recent CPI figure from the previous figure to obtain a CPI index difference. For example, if the February CPI index is 205.251, and the January CPI index is 205.103, then 205.251 - 205.103 = .148.
3. Divide the amount derived in Step 2 by the CPI figure for the earliest index. For example, divide .148 by the index figure for January (205.103) to obtain .000722.
4. Multiply the amount calculated in Step 3 by 100 to obtain the inflation factor. For example, .000722 x 100 = .0722 percent change.
