1. The Consumer Price Index (CPI) measures the overall change in the prices of nearly everything Americans buy. A 5 percent annual inflation rate implies that the goods and services you bought for $100 a year ago would cost you $105 if you bought them today. What was the annual inflation rate in July, according to the U.S. Bureau of Labor Statistics (BLS), which calculates the CPI?
A. 2.7%
B. 3.2%
C. 5.1%
D. 9.1%

2. When people complain about inflation and rising prices, certain items tend to sit atop their list of expenses. As of July, which of these things has had the largest cost increase over the past five years?
A. Grade A eggs
B. Unleaded regular gasoline
C. Car insurance
D. Rent
E. Medical care

3. The U.S. inflation rate is neither the highest nor the lowest in the world. Match each of these countries to its latest reported consumer inflation rate.
A. Brazil 0%
B. China 2%
C. Germany 5.2%
D. Nigeria 8.8%
E. Russia 14.1%
F. Ukraine 21.9%

4. In 1987, the BLS began estimating the cost of living for Americans age 62 and up, who tend to spend more money than younger adults do on health care and housing. Since then, the inflation rate for all Americans has averaged 2.8 percent on an annualized basis. What has been the rate measured for older Americans?
A. 2.7%
B. 2.9%
C. 3.9%
D. 4.7%

5. When inflation was below 3 percent in mid- to late 2024, the U.S. Census Bureau asked households how stressed they were about rising prices over the prior two months. About 21 percent of people with incomes over $200,000 said they were very stressed. What was the percentage of people with incomes of $50,000 to $75,000 who were very stressed?
A. 29%
B. 39%
C. 49%
D. 59%

6. “Shrinkflation” is when a product becomes more expensive because there’s less of it in a new package sold for the same old price. (Think fewer paper towels per roll or 12 ounces per can of coffee instead of 16.) From 2019 through 2023, for which of these items did shrinkflation contribute most to its rising cost?
A. Cleaning products
B. Coffee
C. Paper products
D. Snacks

7. TRUE OR FALSE: If you have a fixed-rate mortgage and inflation starts to rise, it’s a financial win for your bank.

8. A 2025 study found that people who’d seen or heard news stories about higher prices raised their estimates of how bad future inflation would be by 0.4 percentage points. How did people change their inflation estimates when exposed to stories about lower prices?
A. They lowered their inflation estimates a lot.
B. They lowered them a little.
C. They hardly changed them at all.

ANSWERS

1. a. 2.7 percent. Answer d., 9.1 percent, is from June 2022 and is the highest U.S. annual inflation rate recorded in the past 40 years.

2. a. Eggs! The cost of a Grade A dozen rose 157 percent from July 2020 to July 2025. Motor vehicle insurance was up 61 percent; regular unleaded gas, 45 percent; and rent, more than 27 percent. Medical care rose only 11.7 percent, but the BLS isn’t measuring out-of-pocket costs. Those rose about 18 percent per person from 2020 to 2022 alone, according to the Peterson-KFF Health System Tracker.

3. As reported by the website Trading Economics:
Brazil 5.2%
Nigeria 21.9%
China 0%
Russia 8.8%
Germany 2%
Ukraine 14.1%

4. b. 2.9 percent. The BLS warns that this index for older Americans has shortcomings, such as not necessarily reflecting where they shop.

5. c. 49 percent. The figure is 59 percent for households with incomes less than $25,000. As Federal Reserve Bank of Dallas researchers explain, inflation tends to hit low-income households the hardest, partly because a greater share of their income goes toward higher-inflation necessities such as food, gas and rent.

6. c. Paper products. The good news, says the BLS: Although shrinkflation may grab your attention, it has a one-hundredth of 1 percent impact on the inflation rate.

7. False. When prices rise, each dollar you repay your lender is worth less than it was when you got your loan. You, the borrower, benefit in a way from inflation: As your other expenses rise, your fixed monthly payments cost you relatively less.

8. c. They hardly changed them at all. Regarding inflation, Americans appear to be pessimists.