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Price Index (PI)

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Definition of 'Price Index (PI)'

Price Indices (also called Price Indexes) are normalized averages (frequently a weighted average) of prices of a given class (group) of goods or services in a specific political or geographical region during a given time period.

A Price Index can be used to measure inflation (or deflation) and is also used in index linked annuities to ensure that payouts allow recipients to maintain the same standard of living irrespective of the inflation rate.

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