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Price index describes a statistical measure that tracks the changes in the prices of goods and services over time within the retail sector. It provides valuable insights into inflation or deflation trends and helps gauge the purchasing power of consumers. The index is typically calculated using a basket of representative products commonly purchased by consumers, with each product’s price weighted according to its relative importance in the market.

By comparing the index values at different points in time, analysts can assess the rate of price changes and make informed economic decisions.

Price indices play a crucial role in economic policy formulation, market forecasting, and business planning, enabling stakeholders to understand and respond to fluctuations in consumer prices.