We have been given that prices increase at a monthly rate of 0.5%.
Number of months in a year = 12
Let us suppose the item cost $1, then the percentage is given by
[tex]P=P_0(1+r)^n\\ \\ P=1(1+0.005)^{12}\\ \\ P=1.062[/tex]\\
Therefore, increase in a year is
[tex]1.062-1\\ =0.062[/tex]
Therefore, the required percentage in a year is 6.2%
