The formula to calculate the initial price before inflation is:
\[ \text{IP} = \frac{\text{CP}}{1 + \frac{R}{100}} \]
Where:
Reverse inflation is the process of determining the initial price of an item before inflation. It is calculated by dividing the current price by the sum of 1 and the inflation rate divided by 100. This gives the initial price before the inflation rate was applied.
Example:
Calculation:
\[ \text{IP} = \frac{120}{1 + \frac{20}{100}} = 100 \text{ dollars} \]