Price data collection is carrying out from the 10th to 20th of each month, which gives ten days of price data collection as a reference for the whole month. Three hundred and sixteen (316) selected outlets are visited and at least three price quotations of well-defined items specifications are collected for the 269 items.

**Where:**

It 0 = CPI for period t with reference to a base period 0

Pt,i = Price of item i at time t

Pt-1,i = Price of item i at time t-1, i.e. price at previous period

P0,i = Price of item i at time 0, i.e. during base period

W0,i = Weight of item i at time 0, i.e. during base period

**INDEX POINTS AND PERCENTAGE CHANGE**

Movement in index for one period to another can be expressed as a percentage change or changes in index
points. The difference between the two approaches to describe movements in indexes is shown by the
following example:

i). Change in Index Points

All item CPI for November 2012 = 112.3

All item CPI for December 2012 = 111.4

Change in index points are given by:

Change in index points = All item CPI for December 2012 - All item CPI for
November 2012

Therefore:

ii). The Percentage Change

The percentage change in an index between any two periods calculated by subtracting the index value
for the earlier period from the later period, and dividing the result by the value for the earlier
period then multiplied by 100.

Therefore, percentage change from November 2012 to December 2012 is given by:

Analysis: The CPI in December 2012 dropped to 111.4 from 112.3 in November 2012 showing a decrease of 0.9 index points or 0.8 percent.

**COMPUTATION OF INFLATION**

Average inflation rate is measured by comparing the average of twelve months with the average of CPI, in the previous 12 months. That is, Month to Month Inflation rate is measured by comparing the CPI of the current month with that of the same month a year ago.

Where by

CPI2 – is the CPI in the current period

CPI1 – is the CPI in the same period 12 months ago

The rate for the CPI is as follow:

**Interpretation**

An index of 111.4, for example, means there has been a 11.4 percent increase in price since the reference period; similarly an
index of 90 means a 10-percent decrease. Movements of the index from one date to another can be expressed as changes in index
points (simply, the difference between index levels), but it is more useful to express the movements as percent changes.
This is because index points are affected by the level of the index in relation to its base period, while percent changes are not