Inflation is usually listed as an annual statistic, with the cost of purchasing goods increasing between 1 and 4 percent per year. However, there is not one day during the year when prices suddenly go up. Instead, inflation is a gradual process that occurs throughout the year. Therefore, you can present inflation as a monthly statistic. You can either calculate the average monthly inflation during a year based on its annual inflation or use the raw data to calculate the exact inflation for any given month.
From Annual Inflation
Look up the annual inflation rate for the year in question (see Resources). For example, it might be 3.85 percent.
Divide the rate by 12 to calculate the average rate for each month. For example, 3.85 percent divided by 12 is 0.321 percent per month.
Convert the inflation rate to a decimal and multiply this by the cost of a good (product) in one month to estimate its cost the next month. For example, if something sold for $50 in March, multiply 50 times 0.00321 to calculate that the price will increase by approximately 16 cents by April.
From Raw Data
Look up the consumer price index for two adjacent months (see Resources). For example, the CPI in April 2011 was 224.906 and in May 2011 it was 225.964.
Subtract the CPI of the earlier month from the CPI in the later month. In this example, 225.964 minus 224.906 is 1.058.
Divide the result by the CPI of the earlier month and multiply by 100 to calculate the monthly inflation percent. For example, 1.058 divided by 224.906 is 0.0047. Multiply by 100 to get inflation of 0.47 percent.
- Bureau of Labor Statistics: Consumer Price Index Frequently Asked Questions
- EconEdLink.org; The Inflation Rate; September 2003
- AmosWEB.com: Inflation Rate
- Journal of Economics, Business and Management, Vol. 3, No. 7, July 2015. "An Examination on the Determinants of Inflation," Page 678. Accessed March 19, 2020.
- U.S Census. "Median and Average Sales Prices of New Homes Sold in United States," Accessed March 19, 2020.
- U.S. Energy Information Administration. "Short-term Energy Outlook: Real Prices Viewer." Select "imported Crude Oil Prices," Select "Monthly." Download Excel Spreadsheet. Open tab titled "Crude Oil-M." Use second column "Imported Crude Oil Price Nominal." Accessed March 19, 2020.
- Office of Energy Efficiency and Renewable Energy. "Historical Gas Prices," Accessed March 19, 2020.
- Federal Reserve Board of Governors. “What Are the Federal Reserve's Objectives in Conducting Monetary Policy?” Accessed March 19, 2020.
- Federal Reserve Bank of Cleveland. "Inflation 101," Accessed March 17, 2020.