An index number, or an aggregate measure, of the prices of goods in some given category. Consider good i. Let period 0 be the base period, period t the current period, and piτ the price in period τ. The price index for good i is given by pit/pi0. This gives the index in ratio form and has a value of 1 in the base period. It is often multiplied by 100 to give a value of 100 in the base period. If a class of goods i = 1, 2,…, N is concerned, the price index is a ratio of the weighted average of their prices. The weights are the values of the goods purchased in some period. If qiτ is the quantity of good i in period τ, the base-weighted or Laspeyres price index at time t is defined as
and the current-weighted or Paasche price index at time t is defined as
Again these are in ratio form but can be multiplied by 100. Price indices can also be found for security prices or wage rates. See also consumer price index; retail price index.