Calculate Annual Inflation

inflation.js

//--------------------------------------------
// Inflation
//
export const calculateInflation = ( priceArray ) => {
	/*
	--let's assume the price rises from 100 to 150 over a span of 42 days.
	--that's obviously a 50% increase
	--then look at days in full year: 365/42 = 8.690476     
	--for the annualization calculation, the 50% is expressed mathematically as 1.50, like this:
	1.50^8.690476  (that is, taking that number and raising it to 8.69th power)
	--That equation spits out figure of 33.909147
	--to get the annualized inflation rate, subtract 1 from that number and treat the
	first number left of the decimal point as representing hundreds and the second
	number representing thousands, meaning the annnualized rate in this case
	is 3,291% (once rounded up); it sounds a lot more complicated when explained
	like this than it really is. 
	*/

	//--------------------------------------------
	// Get first price and last price
	//
	const firstPrice = priceArray[0].price
	const lastPrice = priceArray[priceArray.length - 1].price

	
	const firstDate = moment(new Date(priceArray[0].date))
	const lastDate = moment(new Date(priceArray[priceArray.length  - 1].date))


	const days = lastDate.diff(firstDate, 'days')


	const percentOfYear = 365 / days


	const priceDiff = lastPrice - firstPrice
	const percentageIncrease = (priceDiff / firstPrice) + 1


	const annualization = Math.pow(percentageIncrease, percentOfYear)
	const inflationRate = Math.round((annualization - 1) * 100)

	return inflationRate	
}