Base Year (Economics)

A base year in economics is a specific year chosen as a reference point for comparing economic data over time, such as inflation rates, GDP, or prices. By using a base year, economists can measure changes relative to that year, making it easier to understand trends, growth, or declines. For example, if the base year is 2010, and we say that prices have increased by 20% since then, it helps to clarify how much the economy has changed in terms of purchasing power and economic performance.