Worked Examples · Example 1
Q.
The base-year (2020) and current-year (2024) prices of four commodities consumed by a household are given below. Compute the Simple Aggregate price index number for 2024, taking 2020 as the base year.
| Commodity | Price in 2020 (), Rs. | Price in 2024 (), Rs. |
|---|---|---|
| Rice (per kg) | 30 | 45 |
| Wheat (per kg) | 25 | 35 |
| Sugar (per kg) | 40 | 55 |
| Cooking Oil (per litre) | 120 | 150 |
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✓ Free question
The Simple Aggregate Method compares the sum of current-year prices to the sum of base-year prices:
First add the base-year (2020) prices of all four commodities:
Then add the current-year (2024) prices of the same four commodities:
Substituting into the formula:
Since the base year's own index is always 100, an index of means prices have risen by on average, as measured by this method, from 2020 to 2024.
✓Final answer
— a 32.56% rise in the general price level from 2020 to 2024.
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