When working with CPI, we can calculate the cumulative inflation in a market with the following equation:

**Cumulative inflation %** = **CPI** - 100

**Cumulative inflation** **with CPI** represents the **total increase in price** of consumer goods & services due to **inflation**!

Given the following basket of goods...

**Question:** Calculate the CPI based on the following table.

Survey Year | Base Year | This Year | |
---|---|---|---|

P_{x} | $3 | $4 | $6 |

P_{y} | $6 | $8 | $12 |

Q_{x} | 10 | 8 | 12 |

Q_{y} | 5 | 6 | 10 |

...we could calculate a CPI of 150.

From here, we can plug this into our cumulative inflation % formula...

**Cumulative inflation %** = **CPI** - 100**Cumulative inflation %** = 150 - 100

...resulting in a cumulative inflation % of 50%!

**Cumulative inflation %** = **CPI** - 100**Cumulative inflation %** = 150 - 100**Cumulative inflation %** = 50

This shows us that since the base year, the prices of Px and Py have increased by 50% due to inflation!