Relative Price Index

A Relative Price Index is a price measure that quantifies relative price changes for a specific market basket compared to a reference period.

AKA: Price Relativity Measure, Comparative Price Indicator, Relative Price Metric.
Context:
- It can typically express Price Change as a percentage difference from a base period value.
- It can typically normalize current price data against a reference period price for price trend analysis.
- It can typically establish a Base Year Value of 100 for price comparison simplification.
- It can typically measure Relative Price Movement across time intervals for inflation monitoring.
- It can typically aggregate weighted price relatives into a composite relative price index for comprehensive economic analysis.
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- It can often enable Cross-Period Comparison through standardized relative values.
- It can often facilitate Real Value Calculation by adjusting for relative price changes.
- It can often support Purchasing Power Analysis through relative price tracking.
- It can often inform Economic Policy Decisions through relative price trend analysis.
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- It can range from being a Simple Relative Price Index to being a Complex Relative Price Index, depending on its relative price calculation methodology.
- It can range from being a Narrow Relative Price Index to being a Broad Relative Price Index, depending on its relative price market coverage.
- It can range from being a Fixed-Base Relative Price Index to being a Chain-Weighted Relative Price Index, depending on its relative price reference structure.
- It can range from being a Short-term Relative Price Index to being a Long-term Relative Price Index, depending on its relative price measurement timeframe.
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- It can be associated with a Price-Index Inflation Rate Value for economic policy assessment.
- It can integrate with National Account System for inflation-adjusted GDP calculation.
- It can connect to Financial Analysis Tool for real return computation.
- It can support Economic Forecasting Model for future relative price projection.
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Examples:
- Consumer Relative Price Indexes, such as:
  - General Consumer Relative Price Indexes, such as:
    - Consumer Price Index for measuring consumer good relative price changes.
    - Core Consumer Price Index for measuring non-volatile consumer relative price changes.
  - Specialized Consumer Relative Price Indexes, such as:
    - Urban Consumer Price Index for measuring urban consumer relative price trends.
    - Food and Beverage Price Index for tracking food relative price changes.
- Producer Relative Price Indexes, such as:
  - General Producer Relative Price Indexes, such as:
    - Producer Price Index for tracking wholesale relative price changes.
    - Raw Material Price Index for monitoring input relative cost changes.
- Economy-Wide Relative Price Indexes, such as:
  - GDP Deflator for measuring economy-wide relative price level changes.
  - Personal Consumption Expenditure Price Index for tracking household spending relative price changes.
- Specialized Relative Price Indexes, such as:
  - Housing Price Index for monitoring residential property relative value changes.
  - Import Price Index for tracking imported good relative price changes.
  - Export Price Index for measuring exported good relative price changes.
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Counter-Examples:
- Absolute Price Measure, which quantifies actual price values rather than relative price changes.
- Price Level Indicator, which represents the general price magnitude rather than its relation to a base period.
- Nominal Price Index, which tracks unadjusted price values without relative comparison.
- Price Dispersion Index, which measures price variation across sellers rather than price change across time.
See: Average, Weighted Mean, Price, Price Level, Cost of Living, Price Measure, Inflation Rate, Base Year Methodology.

References

2014

(Wikipedia, 2014) ⇒ http://en.wikipedia.org/wiki/price_index Retrieved:2014-7-9.
- A price index (plural: “price indices” or “price indexes”) is a normalized average (typically a weighted average) of price relatives for a given class of goods or services in a given region, during a given interval of time. It is a statistic designed to help to compare how these price relatives, taken as a whole, differ between time periods or geographical locations.
  Price indexes have several potential uses. For particularly broad indices, the index can be said to measure the economy's general price level or a cost of living. More narrow price indices can help producers with business plans and pricing. Sometimes, they can be useful in helping to guide investment.
  Some notable price indices include: