The price index reflects the dynamics of their change over time. Its calculation is able to show how much the retail price of a particular product has increased and to determine the real rate of inflation. The indicator can also be spied on in the statistical collection, however, in this case, one cannot be completely sure of the accuracy of the value found.
It is necessary
Historical information, statistics, calculator
Instructions
Step 1
Determine the parameters of the selection of products for which you plan to calculate the price index. These can be both consumer goods and services and industrial indicators. One of the main objects for calculating the indicator is trade and services. The price index is actively used by economists to monitor the overall market situation.
Step 2
Limit the range of interesting categories of goods or services. Think about how the product suits its category. As a rule, only basic units are used in the process, i.e. if we calculate the consumer price index of various manufacturers of dairy products sold in a particular trade network, then it is necessary to cover the goods that account for the bulk of the goods sold and it is possible to completely exclude unclaimed products. Again, a lot depends on the specific situation and the purpose of the study.
Step 3
Decide on the time frame that will form the basis of the calculation. They can be almost anything: year, quarter, month, week, day. In some cases, indicators of 5, 10 or more years are used.
Step 4
Take the value of the base period. It can be found in public economic directories or statistical compilations of a particular enterprise, if they are maintained. It is possible to calculate the price index only if the following data are available: • Current prices; • Basic prices.
Step 5
Use the formula: ijt / t-1 = Pjt / (Pjt-n), where ijt / t-1 is the price index of goods in the reporting period in relation to the base; Pjt is the price of goods in the reporting period; Pjt-n is the price of goods in base period.
Step 6
Check if the value found is correct. It is quite simple to do this: since the consumer price index is found by division, then multiplication must be used for self-test.
