In a market economy, among the indices of quality indicators, an important place belongs to the consumer price index. It allows you to assess the dynamics and recalculate the main indicators of the system of national accounts: gross domestic product, national income, etc.
Instructions
Step 1
Before proceeding with the calculation of the price index, you must understand the principle of its construction. If you need to identify how much the price of certain goods or services has changed or the amount of these goods or services, then you need to bring a certain number of goods at the indicated prices to the total cost. To do this, you need to measure the weight of each element (price or quantity of goods). If you need to reflect the change in prices for goods, then you need to take the quantity of goods as the weights. If it is necessary to find a change in the quantity of goods, then prices will act as weights. It is only necessary to decide at the level of which period (baseline or reporting) to fix them.
Step 2
To find the price index, you can use the Laspeyres formula. In it, the quantity of goods q is fixed at the level of the base period:
Ip = ΣP1xQ0 / ΣP0xQ0, where ΣP1xQ0 is the cost of products sold in the previous (base) period at the prices of the reporting period; ΣP0хQ0 is the cost of production in the base period.
This index shows the change in prices in the reporting period compared to the baseline for goods sold in the base period. In other words, the Laspeyres price index shows how many times the cost of goods in the reference period has increased or decreased due to price changes in the reporting period.
Step 3
You can also calculate the price index using the Paasche formula. In it, the volume of goods sold is set at the level of the reporting period:
Ip = ΣP1хQ1 / ΣP0хQ1, where ΣP1хQ1 is the cost of products in the reporting period; ΣP0хQ1 - the cost of goods sold in the reporting period at the prices of the previous one.
This index characterizes the change in prices of the reporting period in comparison with the base for the goods sold in the reporting period. In other words, it shows how much the value of goods sold has changed. The Paasche price index was actively used in domestic statistics before the country's transition to a market economy. After 1991, the calculation of price indices began to be carried out according to the Laspeyres formula.
