Simple (Unweighted) Aggregate Method

The most direct way to build a price index for a group of commodities is the simple aggregate method. We total the current-year prices of all commodities, total their base-year prices, and express the first total as a percentage of the second:

where $P_{01}$ is the price index of the current year ($1$) with respect to the base year ($0$), $\sum p_1$ is the sum of current-year prices and $\sum p_0$ the sum of base-year prices.

Steps: (i) add up all the base-year prices to get $\sum p_0$; (ii) add up all the current-year prices to get $\sum p_1$; (iii) substitute in the formula.