Which index measures percentage changes in average level of prices month by month?

The correct answer is the Retail Price Index. This index specifically measures the percentage changes in the average level of prices for a basket of consumer goods and services over time, typically on a monthly basis. It reflects the cost of living and is used to understand inflation trends.

The Retail Price Index is particularly important as it considers various categories of expenses, allowing it to track changes in the average price of goods consumed by households. It can also indicate how much prices are rising or falling, providing valuable information for economic planning and policy-making.

While the Consumer Price Index also measures changes in price levels, it is often focused on a specific group of goods and services and can vary in its methodology compared to the Retail Price Index. The inflation rate is derived from these indices and might provide an annualized measure instead of a month-by-month analysis. A benchmark index, on the other hand, typically serves as a standard for measuring performance in investment portfolios and does not relate directly to price changes in consumer goods.