[RAFecon]

Hi, I really should know this but say a question was worded as:

If inflation was 20% in the first 6 months of the year and was then 20% in the second 6 months of the year, what is the rate of inflation for the whole year?



At first I thought the answer was simply 20% - but then I went onto think that:

if the base is 100, and inflation is at 20% for the first 6 months we have 1.2*100=120 = 20%. But now the base is 120 so a further 20% will be 1.2*120=1.44 so total inflation is 44%?

[TheUnbeliever]

If you mean prices rose by 20% over each 6-month period, then inflation for the year is 44% as you say.