Uses of Index Numbers

The main uses of index numbers are given below.

  • Index numbers are used in the fields of commerce, meteorology, labour, industry, etc.
  • Index numbers measure fluctuations during intervals of time, group differences of geographical position of degree, etc.
  • They are used to compare the total variations in the prices of different commodities in which the unit of measurements differs with time and price, etc.
  • They measure the purchasing power of money.
  • They are helpful in forecasting future economic trends.
  • They are used in studying the difference between the comparable categories of animals, people or items.
  • Index numbers of industrial production are used to measure the changes in the level of industrial production in the country.
  • Index numbers of import prices and export prices are used to measure the changes in the trade of a country.
  • Index numbers are used to measure seasonal variations and cyclical variations in a time series.