The Bureau of Labor Statistics has found that the base-year expenditures of the typical consumer break down as follows:
 
Food and beverages	17.8%
Housing	42.8%
Apparel and upkeep	6.3%
Transportation	17.2%
Medical care	5.7%
Entertainment	4.4%
Other goods, and services	5.8%
Total	100.0%
 
Suppose that since the base year, the prices of food and beverages have increased by 4 percent, the price of housing has increased by 5 percent, and the price of medical care has increased by 6 percent. Other prices are unchanged.
 
Instructions: Enter your response rounded to two decimal places.
 
The CPI for the current year is

To calculate the Consumer Price Index (CPI) for the current year, we use the formula:

\[
CPI = \frac{\text{Cost of market basket in current year}}{\text{Cost of market basket in base year}} \times 100
\]

Since we don't have exact values for the cost of the market basket, we can calculate the percentage increase in total expenditures using the weightings and percentage price increases.

### Step-by-Step Calculation:

We are given the following base-year expenditures (in percentages):

- Food and beverages: 17.8%
- Housing: 42.8%
- Apparel and upkeep: 6.3%
- Transportation: 17.2%
- Medical care: 5.7%
- Entertainment: 4.4%
- Other goods and services: 5.8%

We also know the price increases for certain categories:
- Food and beverages: +4%
- Housing: +5%
- Medical care: +6%
- All other categories: No change (0% increase)

Now, let's calculate the contribution to the overall CPI for each category:

1. **Food and beverages**:
   \[
   17.8\% \times (1 + \frac{4}{100}) = 17.8\% \times 1.04 = 18.512\%
   \]

2. **Housing**:
   \[
   42.8\% \times (1 + \frac{5}{100}) = 42.8\% \times 1.05 = 44.94\%
   \]

3. **Medical care**:
   \[
   5.7\% \times (1 + \frac{6}{100}) = 5.7\% \times 1.06 = 6.042\%
   \]

4. **Apparel and upkeep**: No price change, so it remains:
   \[
   6.3\%
   \]

5. **Transportation**: No price change, so it remains:
   \[
   17.2\%
   \]

6. **Entertainment**: No price change, so it remains:
   \[
   4.4\%
   \]

7. **Other goods and services**: No price change, so it remains:
   \[
   5.8\%
   \]

### Total Weighted CPI for the Current Year:
Now, we sum up all the adjusted percentages:

\[
18.512\% + 44.94\% + 6.042\% + 6.3\% + 17.2\% + 4.4\% + 5.8\% = 103.194\%
\]

Finally, the CPI for the current year is:

\[
CPI = 103.19 \, (\text{rounded to two decimal places})
\]

So, the CPI for the current year is **103.19**.

Would you like any further details or have any questions?

Here are five related questions:
1. How is the base year chosen for CPI calculation?
2. What are some limitations of the CPI as a measure of inflation?
3. How does CPI affect government policies like Social Security?
4. What other inflation indices exist besides CPI?
5. How does the CPI impact consumer purchasing power?

**Tip:** The CPI is often used to adjust income payments, such as wages and Social Security, to maintain purchasing power over time.

The Bureau of Labor Statistics has found that the base-year expenditures of the typical consumer break down as follows: 

Food and beverages 17.8%, Housing 42.8%, Apparel and upkeep 6.3%, Transportation 17.2%, Medical care 5.7%, Entertainment 4.4%, Other goods and services 5.8%, Total 100.0%. 

Suppose that since the base year, the prices of food and beverages have increased by 4 percent, the price of housing has increased by 5 percent, and the price of medical care has increased by 6 percent. Other prices are unchanged. 

The CPI for the current year is?

Learn how to calculate the Consumer Price Index (CPI) for the current year using percentage price increases in food, housing, and medical care. The solution uses weighted averages and shows step-by-step calculations for CPI based on typical consumer expenditures. Suitable for college-level economics or statistics students.

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