Introduction

A price index has reference to two periods, distinguished as the base period 0 and current period 1, so it can be denoted P10. The sense of it is that different money amounts M0,M1 in the two periods that have the same purchasing power at prevailing prices p0,p1 should have the relation

M1 = P10M0. 1.1 To many with any awareness about it, a price index is just a number issued to the

public from the government Statistical Office that should serve for ‘indexation’ purposes, such asmay affect wages, salaries, mortgages, loans and other contracts, by use of the homogeneous linear purchasing power correspondence 1.1 with the given number P10 as slope.