A price index (plural: “price indices” or “price indexes”) is a normalized average (typically a weighted average) of prices for a given class of goods or services in a given region, during a given interval of time. It is a statistic designed to help to compare how these prices, taken as a whole, differ between time periods or geographical locations.
Price indexes have several potential uses. For particularly broad indices, the index can be said to measure the economy's price level or a cost of living. More narrow price indices can help producers with business plans and pricing. Sometimes, they can be useful in helping to guide investment.
Some notable price indices include:
- Consumer price index
- Producer price index
- GDP deflator
Read more about Price Index: History of Early Price Indices, Formal Calculation, Index Number Theory, Quality Change
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