Question

Compute the consumer price index for 2016 on the basis of 2015 from the following data.

Commodities	Quantity	Price in 2015	Price in 2016
A	6	5.75	6.00
B	6	5.00	8.00
C	1	6.00	9.00
D	6	8.00	10.00
E	4	2.00	1.50
F	1	20.00	15.00

Answer 1

Consumer price index (CPI) is same as cost of living index. We use the aggregate expenditure method which gives CPI as CPI = ∑p₁q₀/∑p₀q₀ x 100

Consumer price index for the year 2016 is = 174/146.50 x 100 

= 118.77 

On the basis of the year 2015, The cost of living has increased by 18.77%