# annual growth rate from monthly data

1. ## annual growth rate from monthly data

DATE VALUE
1959-01-01 286.6
1959-02-01 287.7
1959-03-01 289.2
1959-04-01 290.1
1959-05-01 292.2
1959-06-01 294.1
1959-07-01 295.2
1959-08-01 296.4
1959-09-01 296.7
1959-10-01 296.5
1959-11-01 297.1
1959-12-01 297.8
1960-01-01 298.2
1960-02-01 298.5
1960-03-01 299.4
1960-04-01 300.1
1960-05-01 300.9
1960-06-01 302.3
1960-07-01 304.1
1960-08-01 306.9
1960-09-01 308.4
1960-10-01 309.5
1960-11-01 310.9
1960-12-01 312.4
1961-01-01 314.1

This is the monthly data. How can I calculate the growth rate from 1959 to 1960?

2. ## Re: annual growth rate from monthly data

kotlon wrote:
> DATE VALUE
> 1959-01-01 286.6
> [....]
> 1961-01-01 314.1
>
> This is the monthly data. How can I calculate the growth rate from 1959
> to 1960?

I assume you mean "through 1960" or "to 1961".

First, to compute the monthly rate, you could use one of the following:

=(314.1 / 286.6) ^ (1 / 24) - 1

=rate(24, 0, -286.6, 314.1)

Don't forget to format the cell Percentage with 2 or more decimal
places.

There are two schools of thought on how to convert monthly rates to
annual rates. One school simply multiplies by 12. The other school
computes the compounded rate over 12 months, for example with one of
the following:

=fv(monthlyRate, 12, 0, -1) - 1

=(1 + monthlyRate) ^ 12 - 1

=(314.1 / 286.6) ^ (12 / 24) - 1

The last formula simply combines the middle formula with the first
monthly rate formula.

PS: I suspect these are CPI numbers. If they were stock prices, there
is yet another school that would multiply the monthly rate by the
SQRT(12). This is the "square root of time" rule, which you can learn
about by doing a google search. It is valid only if certain
statistical conditions are met, including that the periodic changes are
presumed to be independent and normally distributed. I have never
heard those assumptions applied to the CPI.

3. ## RE: annual growth rate from monthly data

Are you trying to compare the growth rate for the years 1959 and 1960 or
calculate the growth rate for both years? To calculate the growth rate for
1959-01-01 to 1960-01-01
I would take make a formula like this =(B13-B1)/B1) (This is assuming that
the values are in column B starting at row1.) format the cell you put the
formula as a % two decimals and you would get the % of growth from the
starting value to the ending one.

"kotlon" wrote:

>
> DATE VALUE
> 1959-01-01 286.6
> 1959-02-01 287.7
> 1959-03-01 289.2
> 1959-04-01 290.1
> 1959-05-01 292.2
> 1959-06-01 294.1
> 1959-07-01 295.2
> 1959-08-01 296.4
> 1959-09-01 296.7
> 1959-10-01 296.5
> 1959-11-01 297.1
> 1959-12-01 297.8
> 1960-01-01 298.2
> 1960-02-01 298.5
> 1960-03-01 299.4
> 1960-04-01 300.1
> 1960-05-01 300.9
> 1960-06-01 302.3
> 1960-07-01 304.1
> 1960-08-01 306.9
> 1960-09-01 308.4
> 1960-10-01 309.5
> 1960-11-01 310.9
> 1960-12-01 312.4
> 1961-01-01 314.1
>
> This is the monthly data. How can I calculate the growth rate from 1959
> to 1960?
>
>
>
> --
> kotlon
> ------------------------------------------------------------------------
> kotlon's Profile: http://www.excelforum.com/member.php...o&userid=35431
>
>

4. ## RE: annual growth rate from monthly data

Are you trying to compare the growth rate for the years 1959 and 1960 or
calculate the growth rate for both years? To calculate the growth rate for
1959-01-01 to 1960-01-01
I would take make a formula like this =(B13-B1)/B1) (This is assuming that
the values are in column B starting at row1.) format the cell you put the
formula as a % two decimals and you would get the % of growth from the
starting value to the ending one.

"kotlon" wrote:

>
> DATE VALUE
> 1959-01-01 286.6
> 1959-02-01 287.7
> 1959-03-01 289.2
> 1959-04-01 290.1
> 1959-05-01 292.2
> 1959-06-01 294.1
> 1959-07-01 295.2
> 1959-08-01 296.4
> 1959-09-01 296.7
> 1959-10-01 296.5
> 1959-11-01 297.1
> 1959-12-01 297.8
> 1960-01-01 298.2
> 1960-02-01 298.5
> 1960-03-01 299.4
> 1960-04-01 300.1
> 1960-05-01 300.9
> 1960-06-01 302.3
> 1960-07-01 304.1
> 1960-08-01 306.9
> 1960-09-01 308.4
> 1960-10-01 309.5
> 1960-11-01 310.9
> 1960-12-01 312.4
> 1961-01-01 314.1
>
> This is the monthly data. How can I calculate the growth rate from 1959
> to 1960?
>
>
>
> --
> kotlon
> ------------------------------------------------------------------------
> kotlon's Profile: http://www.excelforum.com/member.php...o&userid=35431
>
>

5. I understand how growth is calculated but the list is pretty long (up to 2005). should i type this formula for every time?

6. ## Re: annual growth rate from monthly data

Errata ....

I wrote:
> PS: I suspect these are CPI numbers. If they were stock prices, there
> is yet another school that would multiply the monthly rate by the
> SQRT(12). This is the "square root of time" rule

Klunk! That applies only to volatility (std dev).

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