FORMULABANK

Index numbers measure changes in prices or values over time. A value over 100 indicates an increase, while a value below 100 indicates a decrease. It shows whether things are becoming more expensive or cheaper compared to a previous point in time, such as the previous year.

The base year is the reference year used as the starting point for comparison.

Formula:

$\frac{\mathrm{current\; year\; value}}{\mathrm{base\; year\; value}}·100=\mathrm{index\; number}$

Example: Thilde's Pocket Money

The base year is 2008, and the index number for the base year is always 100.

• Index number for 2010: $\frac{480}{240}·100=200$
   
• Index number for 2014: $\frac{2400}{240}·100=1000$
   
• Index number for 2018: $\frac{4000}{240}·100\approx 1666.67$