Types of Index Numbers

Beyond the price indexes built so far, index numbers are also classified by what they measure. A Value Index compares the average value of a variable in one period against its average value in the base period, and is commonly used to track inventory, sales, or trade over time. A Quantity Index measures the change in the physical quantity of goods produced, consumed, or sold over a period — the Index of Industrial Production (IIP) is a well-known example. A Price Index measures the relative change in prices over a period — the Consumer Price Index (CPI) is the most familiar instance, …