Functional Equation of the Rate of Inflation

Abstract

This short note aims to introduce a rule which admits to compute %any time rate of interest in any time per any time, rate of inflation per any time in any moment, if the rate of interest or the rate of inflation by unity of time is an arbitrary integrable function. The main result is the generalization of the well known rule, which holds for the piecewise constant approximation of the rate of inflation to rule which should be used for arbitrary integrable function. The usage of the rule is demonstrated on the examples based on real data of index of prices of non regulated prices in Czech republic.