Calculations of Price index have a number of steps. You can get the complete guide at the link below:
en.wikipedia.org
en.wikipedia.org
How To Calculate The Price Index In A Given And Year And How To Calculate The Price Index In Hundredths?
1 You choose a base year with which you want to compare
2 Choose a basket of goods whose change in price affects the economy
3 Assign a token of hundred to these prices
4 Now according to the change in prices assign new tokens to the prices in the new year. These will show the % change in individual prices
5 Take an average of all the changes and you have the rate of inflation!
6 Each product in the basket of goods can also be given different weightage according to its importance in the economy.
2 Choose a basket of goods whose change in price affects the economy
3 Assign a token of hundred to these prices
4 Now according to the change in prices assign new tokens to the prices in the new year. These will show the % change in individual prices
5 Take an average of all the changes and you have the rate of inflation!
6 Each product in the basket of goods can also be given different weightage according to its importance in the economy.
