Based on the price index in the first and second years, the inflation rate is 5%.
How can the inflation rate be found?
Given the price index, the inflation rate is:
= ( Year 2 - Year 2) / Year 1 x 100
Solving for inflation gives:
= (126 - 120) / 120 x 100
= 0.05 x 100
= 5%
Find out more on the price index at https://brainly.com/question/1889164
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