The market basket used to calculate the cpi in aquilonia is 4 loaves of bread, 6 gallons of milk, 2 shirts, and 2 pairs of pants. in 2005, bread cost $1.00 per loaf, milk cost $1.50 per gallon, shirts cost $6.00 each, and pants cost $10.00 per pair. in 2006, bread cost $1.50 per loaf, milk cost $2.00 per gallon, shirts cost $7.00 each, and pants cost $12.00 per pair. using 2005 as the base year, what was aquilonia’s inflation rate in 2006?

Inflation = 22.44%

Explanation:

Given :

In 2005

Cost of bread = $1.00 per loaf

Cost of milk = $1.50 per gallon,

Cost of shirt = $6.00 each,

Cost of pant = $10.00 per pair.

whereas,

In 2006

Cost of bread = $1.50 per loaf,

Cost of milk = $2.00 per gallon,

Cost of shirt = $7.00 each,

Cost of pant = $12.00 per pair.

∴ = [(Cost of bread × Quantity ) + (Cost of milk × Quantity) + (Cost of shirt × Quantity ) + (Cost of bread × Quantity)]

= $45

Similarly,

  = [(Cost of bread × Quantity ) + (Cost of milk × Quantity) + (Cost of shirt × Quantity ) + (Cost of bread × Quantity)]

= $56

∴ Inflation =

⇒ Inflation = 22.44%