CAIE IGCSE Economics 4.7.2 Measurement of Inflation Questions

Practise Cambridge IGCSE Economics by defining the Consumer Prices Index, calculating inflation from index data and interpreting weighted basket changes.

Exam points

Define the Consumer Prices Index (CPI) as a weighted index measuring changes in the price of a representative basket of goods and services.
Calculate CPI or an inflation rate using index values, price changes and expenditure weights.
Interpret CPI weights and basket composition, including how updated weights affect the measured inflation rate.

[Maximum number: 1]

A Consumer Prices Index (CPI) consists of four items. The table shows the percentage price change for each item over a period of a year and the weight of each item.

Which price change will affect the level of the CPI most?

item

\% price change
over 1 year

weight

food

0.30

housing

0.20

recreation

0.40

transport

0.10

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CAIE IGCSE Economics 4.7.2 Measurement of Inflation Questions question 1