Answer the following questions about the CPPI (Couch Potato Price Index)
2014 2015
Good Q P Q P
Beer 4 $5.00 3 $6.00
Chips 8 $2.00 8 $2.50
Cable TV 1 $36.00 2 $32.00
Soda Pop 2 $2.00 1 $2.25
Pizza 5 $11.00 3 $16.00
a) Calculate the inflation rate based on this index, using 2014 as the base year Give answer as a % and round to 2 decimal places.
d) Explain why, based on the figures above, why the inflation figure you calculated in (a) may overstate the impact of higher prices on the consumer. (Not just a generic answer here, be specific from this data).