Adding up the prices of all four commodities for each year and applying the simple aggregative formula gives a price index of 120 for 2020 (base 2015 = 100), i.e. a 20 per cent rise in the general price level.

We use the simple aggregative method of an unweighted price index. The formula is:

Price Index (P01) = (Sum of current-year prices / Sum of base-year prices) × 100

Step 1 — Total the base-year (2015) prices (Σp0):

6 + 16 + 24 + 4 = 50

Step 2 — Total the current-year (2020) prices (Σp1):

8 + 18 + 28 + 6 = 60

Step 3 — Apply the formula:

Price Index = (60 / 50) × 100 = 1.2 × 100 = 120

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