What Is a Price Level?

The price level is calculated by weighting all prices of a certain product or service item in a certain region and period with the same measurement factor (exchange value expressed in currency), reflecting the comprehensiveness of all such goods or service items in a certain region and period Average price indicator. Although it can be expressed in terms of money, it is very abstract. For example, the price level of eggs in a city in September 2002 was 4.87 yuan per kilogram, and the price level in October was 4.53 yuan per kilogram. Subtracting 4.87 yuan in September from 4.53 yuan in October can conclude that the city's egg price level in October decreased by 0.34 yuan from September.

Price level

Prepared by China

Because the various factors that shape the price often change, the price level is constantly changing. Among them, the change in the value of the necessary social labor time consumed in the production of goods is a productive factor that affects the change in the price of goods. At the same time, various other factors affecting the formation of commodity prices also affect the price level in different ways, but their scope and characteristics are different. For example, changes in the currency value will generally affect the prices of all commodities; changes in the value of individual commodities or the relationship between supply and demand will only have a direct impact on the price of such commodities; national policies will have different effects on the content or specific changes The price of individual products may affect the price of all products.

The prices of various commodities or the prices of similar commodities at different stages of circulation are not isolated, and there are complex links between them. A change in the price of a commodity often results in a horizontal or vertical chain reaction. Some of this response may be offset by other factors to a certain extent; others may be apparent at the price level. The imbalance in the price changes of various commodities has caused the price ratio relationship between them to change. When the rising price and falling price of various commodities cannot offset each other, it will lead to changes in the overall price level of society.

Changes in price levels reflect the state of the national economy and have an important impact on its development.