Price indices measure the rate of price change of goods and services over time, usually published as either monthly or quarterly change. They are official statistics published by National Statistics Offices.
About Price Indices
Watch the video 'Why Measure Prices?' below. The original news article can be found at Newshub.
There are some key terms you need to know.
Index Reference (Base) Period
This is the period in which the average price level of goods and services has an index number of either 100 or 1000 (depending on country). We are interested only in the relationship of the other index numbers to this period.
In 2014 the reference period for the Consumer Price Index (CPI) for these countries was as follows:
What is the reference period for the Consumer Price Index in your country?
Use the 'search' button below to find out. The link will take you to a Wikipedia page that contains an updated list of International Statistics Authorities. Once you have found your country you will need to search for the section on the CPI.
Index Number Series
A series of numbers measuring movement over time from the index reference period value. Here is an example on a time series of the Consumer Price Index from New Zealand.
The change in an index number time series from one period to another expressed as a percentage of its value in the first period.
We can read the percentage change from the reference year directly from the index number series. For example, in the series the percentage change from June 2006 to September 2006 was 0.07%. Use the following exercises to check that you understand how to do this.
In the exercises that follow the final answers should be to one decimal place.
The correct answer is: %
The correct answer is: %
If you don't know how to do this, or got a wrong answer view the section on Percentage Change.
END ABOUT PRICE INDICES EXPLANATION
The history of price indices varies from country to country and there are a number of factors that can affect prices.
Some of these factors impact across all groups of commodities, such as supply and demand, inflationary pressures, global financial crises, natural disasters and government goods and services taxes (GST). Other factors influence only specific commodities, such as Government regulations and subsidies, exchange rates, seasonal weather events and changing consumer preferences, including willingness to pay more for perceived superior goods.
The collection of retail price data began soon after the establishment of a Crown Colony in 1840 with the compilation of basic commodity prices sent back to London as part of the required collection of statistics across the British Empire. The establishment of an Arbitration Court in 1894 to set a fair wage for employees, prompted estimation of the basic living requirements of a working class family through the earliest price surveys, which charted price changes in 'staple' goods, such as food, rent, fuel, and light. Price indices have been published for hundred years (since 1914) with the modern expenditure based Consumer's Price Index being introduced in 1974 (Forbes et al, 2012).
You can use the International Statistics Authority list to find your country of interest.
END ABOUT PRICE INDICES HISTORY