If the price index increased from 100 in 2021 to 110 in 2022 to 132 in 2023, then the rate of inflation is: (a) 10% (b) 32% (c) 20% (d) Cannot be determined

The rate of inflation is defined as the percentage change in a price index between two specific periods. To calculate the inflation rate for 2023, we compare the price index of 2023 with the index of the preceding year, 2022. The formula for the annual inflation rate is: ((Price Index in New Year - Price Index in Previous Year) / Price Index in Previous Year) × 100. Given the price index was 110 in 2022 and increased to 132 in 2023, the calculation is ((132 - 110) / 110) × 100. This results in (22 / 110) × 100, which equals 20%. While the cumulative inflation from the base year 2021 (index 100) to 2023 is 32%, the specific rate of inflation for the year 2023 is 20% based on the year-on-year change from 2022.