Price index

Updated: Aug 20, 2021

An index number, or an aggregate measure, of the price of goods in some given category.

Price index

This gives the index in ratio form and has a value of 1 in the base period. It is often multiplied by 100 to give a value of 100 in the base period.

If a class of goods i = 1,2,….N is concerned, the price index is a ratio of the weighted average of their prices. The weights are the values of the goods purchased in some period.

Price index

Again these are in ratio form but can be multiplied by 100. Price indices can also be found for security prices or wage rates.

Reference: Oxford Press Dictonary of Economics, 5th edt.

Sources & references
Risk disclaimer
James Knight
Editor of Education
James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.