Lesson Plan

• Describe what the Consumer Prices Index (CPI) measures and why a base year is used.
• Explain the formula for calculating CPI and the subsequent inflation rate.
• Calculate CPI values and inflation rates from given price data.
• Interpret changes in CPI and inflation rates for economic policy decisions.
• Identify at least three limitations of the CPI as a measure of inflation.

• Projector or interactive whiteboard
• Printed worksheet with basket data and formulas
• Calculators (or spreadsheet software)
• Graph paper or digital graphing tool
• Handout summarising the CPI and inflation‑rate formulas
• Markers and whiteboard

Start with a quick poll: “Which everyday items have become noticeably more expensive this year?” Connect the responses to the concept of price changes and remind students of their previous work on inflation. Explain that today they will learn how economists quantify these changes using the CPI and will practice calculating inflation rates. Success will be demonstrated by accurately completing a CPI calculation and discussing its implications.

1. Do‑now (5 min): Students list three items whose prices have changed and share brief observations.
2. Mini‑lecture (10 min): Define CPI, explain the base‑year concept and the fixed basket, show a sample line‑graph.
3. Formula walkthrough (10 min): Derive the CPI formula and the inflation‑rate formula, illustrate each term with the basket example.
4. Guided calculation (15 min): In pairs, students compute total basket costs for 2020‑2022, then calculate CPI values and annual inflation rates using the provided data.
5. Interpretation discussion (10 min): Groups analyse what rising, stable, or falling CPI indicates for monetary policy and present their conclusions.
6. Limitations activity (10 min): Each group records two CPI limitations, shares with the class, and the teacher compiles a master list.
7. Quick revision checklist (5 min): Teacher reviews key points and checks understanding with rapid‑fire questions.

Recap that the CPI provides a useful snapshot of price changes but is affected by biases such as a fixed basket and substitution effects. For the exit ticket, ask students to write one advantage and one limitation of the CPI. Homework: complete a worksheet calculating CPI for a new basket using 2023 price data and prepare a short paragraph on how policymakers might respond to the resulting inflation rate.