In trend analysis, the base period is always normalised to 100%. This base period is used as a reference point for comparison to other periods or years to identify trends and growth patterns.
The percentage that will always be the base period in trend analysis is 100%. This is because the base year (or base period) is the timespan whose data is used as the starting point and is normalised to 100. It helps in comparing different sets of data over time to identify patterns and trends with inflation rates, prices, or growth levels. The selection of the base period is arbitrary and it is typically updated routinely so that it remains relatively close to the present, which ensures comparability over time. However, regardless of the base period chosen, the trend percentages relative to the base period will be consistent.
For example, if we are analyzing economic growth, and we choose 2010 as the base year, then all GDP figures are compared to the 2010 level, which is set to 100. If the GDP in 2015 is twice that of 2010, it would be indexed at 200. This allows analysts to see that the economy has grown 100% since the base period, irrespective of the actual GDP values.
In inflation calculations or index numbers, a base period is also employed. Whether you are calculating inflation rates or comparing GDP changes, the base period serves as a consistent reference point. It's important to understand that using a different base period does not change the rate of inflation or growth; it simply changes the index numbers proportionally. Therefore, any base year chosen will result in the same rate of change when assessing inflation or growth patterns.