Index number

Index number: a value expressed relative to a base period fixed at 100, so a reading of 115 means a 15% rise since the base. Used to track prices, quantities or output over time, such as a retail price index.

ByHoang TruongUpdated July 11, 2026

See it move

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A coffee roaster paid €4.00 per kilogram for beans in the base year and pays €4.60 this year. The simple price index is €4.60 divided by €4.00, times 100, giving 115 — meaning bean costs have risen 15% since the base year, which is always fixed at exactly 100.

Where it fits

TopicDescriptive StatisticsCoreSubjectData Analysis & StatisticsCore

The formula

LaTeX

I = \dfrac{P_1}{P_0} \times 100

Variables

$I$: Index number
$P_{1}$: Current period price (€)
$P_{0}$: Base period price (€)

Expresses a single item's current price as a percentage of its base-period price, with the base period fixed at 100.

LaTeX

I_L = \dfrac{\sum P_1 Q_0}{\sum P_0 Q_0} \times 100

Variables

$P_{1}$: Current period price (€)
$P_{0}$: Base period price (€)
$Q_{0}$: Base-period quantity

Tracks the cost of a fixed basket of goods, with quantities held at base-period levels, as prices move over time.

Check yourself

PracticeCORE

A manufacturer tracks the price of a key raw material component. In the base year, the component cost €12.50 per unit; in the current year it costs €14.00 per unit. Using the simple price index formula, what is the current price index for this component?

Select an answer to check your understanding.