Measuring Errors in Price Index: Implications and Insights

Introduction

The measurement of price indices is crucial for understanding inflation dynamics and economic performance. Price indices, such as the Consumer Price Index (CPI) and the Producer Price Index (PPI), serve as essential tools for policymakers, economists, and businesses, influencing decisions on interest rates, wages, and pricing strategies. This report aims to explore the implications of errors in price index measurement, the potential causes of these errors, and their broader economic imp