Thread: price index

if price index for march is 107.9 how do I work out price of petrol
jan base month 100

Originally Posted by bobbie bruce

if price index for march is 107.9 how do I work out price of petrol
jan base month 100

The actual wording of the problem would be very beneficial. What is it you are trying to do?

Dec Unknown
Jan 100.0
Feb Unknown
Mar 107.9
Apr Unknown

Do you need to Interpolate February?
Do you need to Extrapolate December or April?

For future reference, feel free to provide additional information here in the public forum. Waiting on just one person may not be particularly expedient.

See how important it is to give ALL the information?

I'm guessing these are prices.
Jan 88.9
Mar 89.9
May 94.8

These are indices.
Jan base month price index 100
Price index for June 107.9

The question wants a price.
What is the price of petrol in June

The idea of a "Price Index" is to pick a point and call that the base, then adjust everything else to conform to that base.

Jan Price * (some factor) = Jan Index = 100

We just need to discover the "some factor".

In this case, division should be sufficient: 100/88.9 = 1.12486

You should now be able to use this factor to convert between prices and indeces based on January.

Price to Index
Mar 89.9 (multiply by 1.12486) ==> 101.1
May 94.8 (multiply by 1.12486) ==> 106.6

Index to Price
June 107.9 (divide by 1.12486) ==> 95.9

Note: I'm still just guessing in at least three places. If we don't yet match the book, you'll have to provide better information.

many thanks for your reply. My computer crashed and I lost all work. I now can understand what you are telling me.If I was half as clever as you I could manage all these questions. again thanks