Of course, this signaling process, which involves individual prices, would work with or without government statistical agencies that measure aggregate price levels, and in this sense, price measurement probably is not fundamental for the overall efficiency of the market economy. Indeed, vibrant market economies existed long before government agencies were established to measure prices.
Nonetheless, in a modern monetary economy, accurate measurement of aggregate price levels is of considerable importance, increasingly so for central banks whose mandate is to maintain financial stability. Accurate price measures are necessary for understanding economic developments, not only involving inflation, but also involving real output and productivity.