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Calculating Chain Base Index Numbers
 
Finding out link relative. It is the
ratio of current year’s price relative to that of
previous year's.
Link relative = [(Current Year’s Price relative)/(Previous
year’s price relative)] X 100
and Price relative = (Current year’s price/Base year’s
Price) X 100
Obtaining Chain Base Index: Chain index
of any year is the average link relative of that year
multiplied by the chain index of the previous year
divided by 100.
Chain index for the current year = [(Average link
relative of the current year) X (Chain index
of the previous year)]/100
Q. 5. The following table gives the average
wholesale prices of the four grains for the years
1997 to 2001. Compute chain base index number. (June
2002)
|
Grain
|
1997
|
1998
|
1999
|
2000
|
2001
|
|
Wheat
|
400
|
440
|
360
|
480
|
500
|
|
Gram
|
800
|
880
|
960
|
1000
|
1200
|
|
Barley
|
480
|
520
|
420
|
560
|
600
|
|
Rice
|
600
|
640
|
720
|
680
|
720
|
Solution.
| Link relatives based on preceding
years |
|
Grain
|
1997 |
1998 |
1999 |
2000 |
2001 |
|
Wheat
|
[(400/400) X
100]
= 100 |
[(440/400) X
100]
= 110 |
[(360/440) X
100]
= 81 |
[(480/360) X
100]
= 133 |
[(500/480) X
100]
= 104 |
|
Gram
|
[(800/800) X
100]
= 100 |
[(880/800) X
100]
= 110 |
[(960/880) X
100]
= 109 |
[(1000/960) X
100]
= 104 |
[(1200/1000)
X 100]
= 120 |
|
Barley
|
[(480/480) X
100]
= 100 |
[(520/480) X
100]
= 108 |
[(420/520) X
100]
= 80 |
[(560/420) X
100]
= 133 |
[(600/560) X
100]
= 107 |
|
Rice
|
[(600/600) X
100]
= 100 |
[(640/600) X
100]
= 106 |
[(720/640) X
100]
= 112 |
[(680/720) X
100]
= 94 |
[(720/680) X
100]
= 105 |
|
Total of link relatives
|
400 |
434 |
382 |
464 |
436 |
| Average of Link
Relative |
400/4 = 100 |
434/4 = 108.5 |
382/4 = 95.5 |
464/4 = 116 |
436/4 = 109 |
| Chain Base
Index Number |
100
|
[(108.5 X 100)/100] = 108.5
|
[(95.5 X 108.5)/100] = 103.61
|
[(116 X 103.61)/100] = 120.18
|
[(109 X 120.18)/100] = 130.99
|
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