Index numbers

An index number measures the value of an item (or group of items) at a point in time as a percentage of the value of the item (or group of items) at another fixed time point.

Price and quantity indices

Price indices summarise how the prices of items vary over time.

Quantity indices describe how the quantities of items (e.g. imports) vary over time. We only consider price indices in this section, but many of the principles and formulae carry over to quantity indices.

Common business indices

The Consumers Price Index (CPI) in a country summarises the overall price level of goods and services purchased by households. Other price indices describe prices of energy, accommodation and various classes of food.

Stock market indices such as the Dow Jones (USA), FTSE 100 (UK) and NZX50 (New Zealand) summarise changes in the value of company shares. Other stock market indices such as the NASDAQ (technology) describe particular market segments.