Laspeyres Index

The Laspeyres index is calculated by the division between the money amount in current prices (current price multiplied by base quantity) needed to purchase a basket of goods whose quantities were fixed in the base period (zero) and the amount of money needed for the same basket at base prices (base price multiplied bu the base quantity).

    \[ I_Laspeyres = \frac{\sum P_t * Q_0 }{\sum P_0 * Q_0 } \]

where:

ILaspeyres = Laspeyres index

Pt = price of the goods on period “t” (current/actual).

Q0 = quantity of goods on period base (zero).

Po = price of the goods on period zero (base).

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