The table below shows the annual rate of consumer price inflation for an economy over a three-year period:
YearAnnual Inflation Rate (%)Year 1+5.0Year 2+1.2Year 3−2.0 \begin{array}{|c|c|} \hline \text{Year} & \text{Annual Inflation Rate (\%)} \\ \hline \text{Year 1} & +5.0 \\ \hline \text{Year 2} & +1.2 \\ \hline \text{Year 3} & -2.0 \\ \hline \end{array} YearYear 1Year 2Year 3Annual Inflation Rate (%)+5.0+1.2−2.0Ceteris paribus, which of the following statements can be correctly concluded from the data?
The purchasing power of the country's currency increased between Year 1 and Year 2.
The average level of consumer prices was higher in Year 2 than in Year 1.
The average cost of living fell between Year 1 and Year 2.
The economy experienced deflation in both Year 2 and Year 3.
