Manny's real income has increased by 9%.
A consumer price index calculates the weighted average of a market basket of goods and services that households have purchased. The measured CPI changes over time to reflect variations in price.
The CPI is one of the most widely used metrics for measuring inflation and deflation. Inflation is a crucial indicator of a country's economic health. Governments and central banks utilize the CPI and other indices when making economic decisions. Among these, the choice of whether to raise or lower interest rates is critical.
To determine CPI To calculate the CPI in any given year, divide the price of the market basket in year t by the price of the same basket in the base year.
Rate of inflation = [tex]\frac{121 - 110}{121}[/tex]
Rate of inflation = 0.09
Rate of inflation= 9%
hence, manny's real income has raised by 9%
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