Paper 2 · November 2016 · inflation
Annual inflation fell from 46,6% in December 1998 to 44,2% in January 1999 even though prices rose by 3,8% during January itself. The best explanation is
Aa high base a year earlier pulls the annual rate down
Bprices actually fell during the month of January 1999
Cthe basket of goods used in the index was abolished
Dthe annual and monthly rates measure different baskets
Explanation
The annual rate compares January 1999 with January 1998, and prices had already risen steeply in that base month. Prices went on rising month by month, but more slowly than a year before, so the twelve-month figure fell while the month-on-month figure stayed positive.
Derived from ZIMSEC Economics 9158/2 Paper 2, November 2016, Q2