The term price index refers to a normalized average price of certain goods and / or services in a given geography and at a point in time. Price indices are designed and analyzed to understand how prices change over time or vary between geographies.
A price index is a benchmark measure that allows analysts to understand how the price of goods and / or services varies over time or between geographies. Broad based indices allow economists to understand how well an economy is performing and the impact of prices on the cost of living. Several of the more well-known price indexes appear below, some of which help to guide monetary policy decisions by the Federal Reserve:
producer price index, International Comparison Program, import and export price index, GDP deflator, employment cost index, consumer price index