An Example of How to Use Price Indexes

Price indexes are quite straightforward tools. Suppose you know the price of steel, in January 2020, and need to update it to May 2020. To update the price, just multiply it by the ratio of steel Price Index at May 2020 over the steel Price Index at January 2020, as expressed in the equation below:

Steel Price [May 2020] = Steel Price [Jan 2020] * ( Steel Price Index [May 2020] / Steel Price Index [Jan 2020] )

Notes

When using price indexes provided by Intratec, bear in mind that only prices in US dollars must be used

Updated on: 03/06/2023