The purchasing power of a dollar will erode by 8.26%.
The purchasing power of $1 if inflation rate is 8% is as follows:
Purchasing power = 1 / (1 + 0.08)
Purchasing power = 1 / 1.09
Purchasing power = 0.91743119
Change in purchasing power = [(0.91743119 - 1) / 1]*100
Change in purchasing power = [(-0.08256881/1} * 100
Change in purchasing power = -0.08256881 * 100
Change in purchasing power = -8.26%
Therefore, the purchasing power of a dollar will erode by 8.26%
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