You made $3000 on a part-time job last year. If you expect to make the same amount this year, and the inflation rate is three percent, what is your purchasing power?
New spending power is 97.087% of this year
(to 3 decimal places)
Assumption: The inflation rate of 3% is applied to the cost of everything (not so in real life).
So the change is:
This years cost:
Thus the new
Expressing this as a percentage of last years 'spending power' we have:
New spending power is: 97.087% to 3 decimal places