Index Numbers: Laspeyres, Paasche, Fisher & Building a Price Index

What you'll build

What you will be able to do

Each lab ends with a concrete result that you build yourself and the checker confirms, cell by cell.

• Turn six years of coffee-bean prices into an index with 2021 = 100, rebase it to 2024 = 100 and read a percentage change off the index.
• Compare one product's price at six suppliers and build the three classic unweighted indices from the same data.
• Price the café's 2021 basket at 2021 and at 2026 prices and turn the two totals into a Laspeyres price index.
• Compute Laspeyres and Paasche from the same prices, combine them into the Fisher index and see which way substitution pushes each one.
• Split the café's spending growth into a price part and a quantity part and check that they multiply back to the value index.
• Compute the newest annual link from an up-to-date basket and chain six years of links into one index with 2021 = 100.
• Turn the café's nominal revenue into constant 2021 dollars, restate past wages in 2026 dollars and measure real growth correctly.
• Compute each item's contribution to the café's cost inflation in percentage points, find the main driver and rank all contributions in a bar chart.