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Calculating percentage change in an index

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The consumer price index is a fixed-weight index. It compares the price of a fixed bundle of goods in one year with the price of the same bundle of goods in some base year. Calculate the price of a bundle containing 200 units of good X, 150 units of good Y, and 100 units of good Z in the years 2011, 2012, and 2013. Then answer the question below.
Goods Quantity Consumed Prices 2011 Prices 2012 Prices 2013
X 200 $1.00 $0.95 $1.15
Y 150 1.50 1.55 2.00
Z 100 3.00 2.95 3.00

Convert the results into an index by dividing each bundle price figure by the bundle price in year 2011
Calculate the percentage change in your index between 2011 and 2012, and again in between 2012 and 2013.

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Solution Summary

The solution helps in estimating CPI and percentage change in your index between 2011 and 2012.

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how the Consumer Price Index is calculated

Can anyone find out how the Consumer Price Index (CPI), the primary measure of inflation used by the government, is calculated? Why might this method not reflect the real cost of living increase for the average person?

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