The Paasche price index is an index formula used in price statistics for measuring the price development of the basket of goods and services that is consumed in the current period. The question it answers is how much a basket that consumers buy in the current period would have cost in the base period. So it is also defined as a fixed-weight, or fixed-basket, index, because it uses the basket of goods and services and their weights from the current period. It is therefore also known as a “current weighted index.”
Other formulas (Laspeyres price index, Fisher price index) may be chosen for calculating price indices; the choice in a particular case is partly determined by the data requirements of the formulas which are different.
Further information
- European Price Statistics - An overview - 2008 edition