Price Indices: Measuring Inflation and Deflation
Inflation (or, deflation) is measured using a price index. A price index is the ratio (expressed as a percentage) of the historical price of goods or services at some point in time to the price of the same goods or services at another point in time.
Several defined price indices are used in the United States today; two of them are described in this chapter. The procedure for making these price indices is the same as for creating your own. This chapter shows how to make your own price index first so that you can better understand what price indices mean and how they work.
To make your own price index, ...
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