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How to Calculate CPI With a Ratio of CPIs for the Year of Interest and the Nominal Year

You can't buy as much with the same amount of money this year as you could last year. This is because inflation raises the costs of goods and services over time. Economists use something called the consumer price index (CPI) to measure the relative value of money over different years by examining the prices of specifically selected goods. By creating a ratio, you can use the CPIs from a nominal year and a year of interest to see what the value of a specific amount of money in the nominal year would be worth in the year of interest.

Instructions

- 1
  Find the CPI values for the nominal year and the year of interest. You can consult the "Resources" section below for United States Bureau of Labor Statistics CPI data.
- 2
  Divide the CPI for the year of interest by the CPI for the nominal year. This value will be the ratio you will use to determine the value of a set amount of money in the nominal year in the currency of the year of interest.
- 3
  Multiply the amount of money in the nominal year with the ratio you calculated from the two CPI values. The product of this equation will be the amount of money in the year of interest that has the same purchasing power as the amount of money from the nominal year.

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