A Moving Average-based Approach for Price Index Calculations

The price index number problem can be framed as the problem of decomposing the value of a well-defined set of transactions in a period of time into an aggregate price term times an aggregate quantity term.The simplest price index is a fixed basket type index, and the two well-known choices for the fixed basket lead to the Laspeyres and Paasche price indices.Unfortunately, the Paasche and Laspeyres measures of aggregate price change can differ, sometimes substantially.In this paper, instead of using the Laspeyres, Paasche, or the Fisher's price indices, a moving average-based approach and the two others for price index calculations are proposed, and the numerical example is given to compare these indices for selected commodities purchased by per two-or-more-person's household between 2000 to 2009.