Are adjustments made for changes in the price or quality of a measured item?
The IPP attempts to hold the quality of items being priced constant so that the pure price change can be isolated from changes in prices brought about by alterations to the item. When an item price used in index calculation has a specification modification, the IPP adjusts that item’s price to reflect any change in the quality of the item. This means that when a sample item has a modification to one of its features and that modification is reflected in its price, a “link” price is created in order to compare the item’s price in the period with the modification to its price in the period before the modification. Creating an adjusted or link price is often referred to as a quality adjustment. A requirement for creating a link price is that the item must remain unchanged in its class, general function, or purpose; otherwise, the price series is restarted. Examples where an item has had a change in one of its features but the nature of the item and the factors determining price remain the
