Calculate a new consumer price index for the data in the following exhibit. Assume that current-year prices of Twinkies, fuel oil, and internet are $0.95/package, $1.25/gallon, and $15.00/month, respectively.

Calculate the current year’s cost of the market basket and the value of the current year’s price index. What is this year’s percentage change in the price level compared to the base year?
(Hint: Price index = (cost of market basket in current year/cost of market basket in current year) *100)

Current expenditures now equal $346.75 for Twinkies, $625.00 for fuel oil, and $180.00 for Internet. Thus, the current year's cost of the market basket is $1,151.75, and the new price index is 97—the average price level has fallen by 3 percent since the base year. The percentage change is equal to the change in the index (97100) divided by the base year index (100) then multiplied by 100. The fall in price of internet outweighs the effect of increase in price level of Twinkies.