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Index numbers

Question 10

Inflation

The average salary of a group of manual factory workers has been tracked for a
number of years as follows, along with the consumer prices index (CPI) figures
for those periods:
Year Salary ($) CPI value

2012 9,000 110
2013 9,200 114
2014 9,350 117
2015 9,500 121
2016 9,700 126

Recalculate each year’s salary as though it were expressed in 2016 prices.

2012 $9,000 × 126/110 = $10,309
2013 $9,200 × 126/114 = $10,168
2014 $9,350 × 126/117 = $10,069

2015 $9,500 × 125/121 = $9,893
2016 $9,700

Salaries for these workers have not been keeping up with inflation

Illustrations and further practice

Now read illustration 6 and try TYUs 10 to 13 from Chapter 9

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