A Price Index is a statistical measure that reflects the average change in prices over time for a specific set of goods and services. It helps economists and policymakers understand inflation or deflation trends in an economy. Common examples include the Consumer Price Index (CPI) and the Producer Price Index (PPI), which track price changes from the consumer and producer perspectives, respectively. Price indices are calculated by comparing the current prices of a basket of goods to the prices of the same basket in a base year. This comparison allows for the assessment of purchasing power and cost of living changes, making it a vital tool for economic analysis and decision-making.