Characteristics of Index Number

 On the analysis of various definitions of index number the following may be its characteristics:

1.      Expressed in Number: Index number can be expressed in number only, though the changes can be expressed in words also, like productions is increasing, prices   are decreasing. But the index number expresses these changes numbers.

2.      Expressed on an Average: Index number presents the changes on an average bases. These are generally used to express the changes in a group of variables and not of a particular variable or commodity, if the prices of some commodities are increasing there may be at constant level. But on an average what other is j the change in prices of a group of items will be represented by index numbers. 

3.      Special Type of Average: Index numbers are of special type of average because in simple average data are uniform and their units are also even. Where in index numbers the data having different measurement units are used for these percentages are called. As price relatives. Price relatives are averaged for computing index numbers. Hence the index numbers are really average of ration.  So these are called as special type of averages.

4.      Comparative Nature: The index numbers are comparative in nature because they measure relative changes and relative changes are computed on the basis of some other data so it  can be  said that index  numbers are comparative.

5.      Universal Utility: Generally index numbers are used to measure the changes in prices in the group of items but the changes in the quantity of agricultural production, industrial production, imports, and exports can also be measured through index numbers.