Question: how to calculate pay increase based on cpi?
Answer: Step #1: Get the 12-month rate of inflation from the Consumer Price Index (CPI). ... 
Step #2: Convert the percentage to a decimal by dividing the rate by 100 (2% = 2 ÷ 100 = 0.02).
Step #3: Add one to the result from Step #2 (1 + 0.02 = 1.02).