YoY Rate

Subtype of Quote Type

The reference index value at any time t is defined as the annual inflation rate r(t) given by the formula:
r(t) = I(t)/I(t-1Year) - 1
where
I(t) is the raw inflation index at time t
The meaning of the various quantities is as in the relative index
Relative
Note, this index does not require knowledge of some base value I(tâ‚€), as the relative index does.
Also the raw inflation index I(t) does not need to be known since only the rate expression r(t) is relevant in calculating cash flow amounts that are contingent on a year-on-year inflation rate.