1) Jan 2002 is the base year. A price index normalises prices, setting the price level in one year equal to 100 (the base year, 2002 here) and then expressing all other years' prices relative to that. This is done by dividing through by the price level in the base year and multiplying by 100.
2) Because production costs have increased, then for any given price level, a lower quantity will be supplied. The AS curve depicts the relationship between prices and output supplied, so must shift inward to reflect this.