You took out a loan one year ago at a nominal interest rate of 7.5%. The CPI stood at 173.2 at the time and you expected it to rise to 178.6 over the year. Today the CPI is actually 179.5
Calculate the expected real interest rate on the loan and the real interest rate on the loan.
The expected inflation rate when you took out the loan equals (178.6 - 173.2 )/173.2 = 3.1%, so your expected real interest rate was 7.5% (nominal interest rate) - 3.1% (expected inflation rate) = 4.4%. The actual inflation rate over the period equals (179.5 - 173.2 )/173.2 = 3.6%, so your real interest rate was 7.5% (nominal interest rate) - 3.6% (inflation rate) = 3.9%.
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