Its close to Ramdaan!! Everyshop is busy, my freinds tells me breadwinner is under pressure 🙂
You can feel prices changing before you can explain them: an apple costs a bit more, onion price creep up, rent renewals sting.
Mathematically, though, “a bit more” is useless — what matters is how much, compared to what, and over what time.
That’s why economists don’t just list prices: they build price indices and talk in percentage changes.
The Maldives Bureau of Statistics reported that the national Consumer Price Index (CPI) rose by 0.16% in December 2025 (month-on-month) and was 0.41% higher than December 2024 (year-on-year) — a simple but powerful real-life use of percentage change.
Zooming out to the bigger picture, the Bureau’s CPI Annual 2025 release shows the all-groups CPI rose by 4.04% in 2025, compared with 1.40% in 2024 — a good reminder that “inflation” depends heavily on which time window you’re comparing.
One extra detail that’s quietly “maths-heavy”: Maldives’ CPI is built as an index with a base period (November 2022 = 100) and specific weights (weight reference noted as 2019). The Bureau also publishes separate figures for Male’ and the Atolls, which can differ from the national average — and even small method changes (like reclassifying certain items and recompiling a series) can shift how you interpret trends.
1) Percentage change is the language of “compared to what?”
If something goes from 600 to 630, the change is 30 — but the percentage change tells you the scale of the change relative to the starting point. Examiners love this because it shows you understand “fair comparison”.
Micro check (answer it now):
A price index goes from 100 to 125. What percentage increase is that?
Answer: It’s a 25% increase, because 125 is 25 more than 100, and 25 out of 100 is 25%.
2) Why price indices exist (and why “weights” are everything)
A price index (like CPI) tracks the cost of a basket of goods and services. Not everything in the basket matters equally, so items are given weights (housing typically matters more than, say, stationery).
You don’t need advanced statistics for IGCSE — just remember: an index summarises lots of prices into one number, so it’s a powerful summary, not a perfect description of every person’s experience.
Diagram to draw (text-only):
Draw a simple bar chart labelled “Household spending weights”: Housing (largest bar), Food (medium), Transport (medium), Clothing (small), Other (small). Add a note: “Heavier weight → bigger impact on the index.”
3) Reverse percentages: the most exam-tested “real life” trick
Headlines say: “Prices are 10% higher than last year.”
If you want last year’s price, you reverse the percentage (divide by the multiplier), not subtract 10%.
4) Real vs nominal: the fairest comparison
- Nominal change: what the number did (e.g., your salary).
- Real change: what that number can buy after prices changed.
A simple IGCSE way to think:
If your pay rises 3% but prices rise about 1.5%, your buying power rises by roughly the difference — but you should calculate it properly when asked.
What examiners are testing here
- Correct base value (the “compared to what” number).
- Clear use of multipliers (e.g., 1.10 for +10%).
- Reverse percentage done by division, not subtraction.
- Sensible rounding (and stating it).
- A quick reasonableness check (estimate first, then calculate).
- Interpretation in words (e.g., “real increase” vs “nominal increase”).
Structured Question (8 marks): Inflation and Real-World Percentages (Original)
A country publishes a Consumer Price Index (CPI) with base year = 100.
In December, CPI = 128.0. In January, CPI = 129.9.
A student’s monthly bus pass costs MVR 600 in December.
(a) Calculate the percentage increase in CPI from December to January. Give your answer to 1 decimal place. (2)
(b) Assuming the bus pass changes in line with CPI, estimate its January cost. Round to the nearest rufiyaa. (2)
The student’s monthly pay rises from MVR 5,000 in December to MVR 5,150 in January.
(c) Calculate the real percentage change in the student’s pay from December to January (adjusting for inflation). Give your answer to 1 decimal place. (3)
A shop says: “Prices are 10% higher than last year.” A jacket costs MVR 220 today.
(d) Find the jacket’s price last year. (1)
(a)–(d) Approach strategy
- For inflation between two months, use change ÷ original.
- For “moves with CPI”, scale by new index ÷ old index.
- For real change, compare pay growth to price growth (don’t just subtract unless estimating).
- For reverse percentage, divide by the multiplier.
Full worked solution (with a mental check)
(a) CPI change = 129.9 − 128.0 = 1.9
Percentage increase = (1.9 ÷ 128.0) × 100
1.9 ÷ 128.0 = 0.01484375
× 100 = 1.484375% ≈ 1.5% (1 d.p.)
Mental check: 1.9 is about 2; 2 out of 128 is about 1.6% → 1.5% is plausible.
(b) Scale cost by the CPI factor: 129.9 ÷ 128.0 = 1.01484375
New cost = 600 × 1.01484375 = 608.90625 ≈ MVR 609
(c) Nominal pay factor = 5150 ÷ 5000 = 1.03
Price factor = 129.9 ÷ 128.0 = 1.01484375
Real factor = 1.03 ÷ 1.01484375 = 1.01493 (approximately)
Real percentage change ≈ (1.01493 − 1) × 100 = 1.493% ≈ 1.5% (1 d.p.)
Mental check: Pay up 3%, prices up ~1.5% → real gain should be around 1.5%. Matches.
(d) “10% higher” means today = 1.10 × last year
Last year = 220 ÷ 1.10 = MVR 200
“Examiner is looking for” (mark-points)
- (a) Uses December CPI as the base; correct percentage method; correct rounding.
- (b) Uses ratio of indices (129.9/128.0), not adding “1.5% of 600” without justification; sensible rounding.
- (c) Recognises “real” needs inflation adjustment; sets up correct factors; clear final statement with 1 d.p.
- (d) Reverse percentage by dividing by 1.10.
Common errors (and quick fixes)
- Using the wrong base (dividing by 129.9 instead of 128.0). → Base is the starting value.
- Subtracting 10% to reverse (220 − 10% of 220). → Reverse = divide by 1.10.
- Calling nominal change “real”. → Real must account for price level changes.
- Rounding too early. → Keep more digits until the final step.
Recap (key takeaways)
- Percentage change is always “change compared to the starting value”.
- Indices turn many prices into one number; weights decide what matters most.
- “Moves with CPI” means scale by new ÷ old, not add a random amount.
- Reverse percentages require division by the multiplier.
- Real change compares income growth to price growth, not just the raw increase.
Conceptual thinking questions
- Why can two families experience “different inflation” even when the national CPI is the same?
- If prices rise 10% and then fall 10%, why is the final price not the original price?