### What is an index number?

Index numbers are used to measure changes and simplify comparisons. The Office for National Statistics (ONS) produces index numbers principally in the field of economics. Economists are interested in how changes in the monetary value of economic transactions can be attributed to changes in price (to measure inflation) and changes in quantity (to measure sales volume or economic output). Index numbers typically measure these changes over time. However, index numbers can also be used to make other comparisons, such as between regions of the UK.

Mathematically, an economic index number is an average of the many different changes in price or quantity of the goods and services included in the index. There are many different valid ways of determining this average and, consequently, many different possible estimates of average price and quantity changes. It is therefore important that index numbers are calculated in a way that is appropriate for their intended use.

### The work of the team

Quality assurance of National Statistics is a major and developing role for methodologists. The Index Numbers, Prices and Inflation Measurement Team is involved in a variety of new developments related to index numbers, providing guidance on best practice and appropriate methods, as well as ensuring that the developmental work meets National Statistics quality standards.

### Aims

The team aims:

• to provide a source of expertise on the formulation of index numbers and related topics

• to provide advice and quality assurance to producers of indices

• to carry out research into new methods

• to provide training on index numbers to ONS and Government Statistical Service (GSS) staff

Many of the index numbers involved in the team's work relate to the measurement of price and wage movements, that is, to inflation measurement. These index numbers include the high profile Consumer Prices Index and Average Weekly Earnings, all of which are central to the analysis and control of inflation.

The team also advises on other major price indices, such as the Producer Price Indices and Services Producer Price family of indices. However, index number expertise is also relevant to quantity indices, such as the Retail Sales Index, Index of Production, Index of Services and other quantity indices used in, or produced for, national accounts.