Price index

Definition

A price index measures the average change over time in the prices paid by consumers for a fixed basket of goods and services. It helps track inflationary trends by comparing current prices with those from a base year.

Related terms

Consumer Price Index (CPI): A specific price index that measures changes in the average prices paid by urban consumers for a fixed basket of goods and services.

Producer Price Index (PPI): A price index that measures the average change in selling prices received by domestic producers for their output.

Inflation rate: The percentage increase in the general level of prices over a period of time, usually measured annually.