Question

Mr. Malan bought a new car for N$ 7500 in 1984.Today a similar car cost N$ 156 000.what was the inflation rate on cars over this period?

Answer 1

Recall the following formula,

$\text{Inflation rate}=\frac{\text{Cost price index in this year-cost price index in prior year}}{\text{Cost price index in prior year}}\times 100$.

Here,

The cost of the car in 1984 = $ 7500,

The cost in 2020 = $ 156000

Hence,

$\text{Inflation rate}=\frac{156000-7500}{7500}\times 100$

                 $=\frac{148500}{7500}\times 100$

                 $=\frac{1485}{3}\times 4$

                 $=1980\%$

Therefore, the inflation rate would be 1980 % or 19.8.