Laspeyres index

The Laspeyres index is a way to measure how prices change over time for a fixed basket of goods and services. It uses the quantities from a base period, meaning it keeps the same set of items and amounts, and compares their total cost at current prices to their cost in the base period. This helps to see how much prices have increased or decreased, providing an estimate of inflation or deflation, assuming consumers buy the same goods and quantities over time. It’s widely used for economic analysis and indexes like the Consumer Price Index (CPI).