Thread: Percent change in purchasing power

How would you calculate the percent increase or decrease in purchasing power when given the wages and index number.

Wages were $22000 four years ago, when the index was 104. $28000 today when the index is 110. The answer is 20.3%, not sure how you would calculate that.

The numerator and denominator are both re-expressing the nominal wages back to their 'base-year' purchasing-power amounts. The rational comparison of the two shows a 20.33% increase in terms of purchasing power.