1. ©G Dear2010 – Not to be sold/Free to use
Financial
Mathematics
Investing Money
Applied Mathematic
(Preliminary General 1)
Inflation
Stage 6 - Year 11
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©G Dear2010 – Not to be sold/Free to use

2. Inflation, What is it? The percentage change in the price
of goods and services over time.

3. World Inflation Rates Jan 1st 2009 -4% San Marino 0% Brunei 4% 563%
Zimbabwe
Jan 1st 2009
Source:

4. How does it affect You? Inflation is published as the CPI.
[Consumer Price Index]
CPI is the change in the cost of purchasing a representative ‘basket of goods and services’ over a period of time.
An items costing $10 in 1970
costs $27 in 1980
and $59 in 1990.

5. How does it affect You?
According to the ABS the CPI for the 2010 June Quarter was 0.6%
Annual CPI = 0.6 x
4 quarters
= 2.4% per annum
The Media will worry you
by saying that Electricity
Is going up by 24%
In the next 10 years.
But this is normal.

6. What would we expect it to cost in 5 years?
How does it affect You?
Annual CPI is 2.4% p.a.
BRAND NEW SUZUKI Swift RS415 S
What would we expect it to cost in 5 years? 5
Cost =
20680
x ( )
= 20,680 x
≈ $23,280
$20,680 in 2010

7. What would we expect it to cost in 1 year?
How does it affect You?
Annual CPI is 2.4% p.a.
Atari Style Joystick
What would we expect it to cost in 1 year? 1
Cost = 35
x ( )
= 35 x 1.024
= $35.84
$35