Table of Contents
CONSUMER PRICE INDEX (CPI)
- The Consumer Price Index is the name given in India to the index that shows the rate of inflation at the retail level (CPI). The CPI basket comprises 448 items in rural and 460 items in urban.
- There were four Consumer Price Indices in the economy, each covering a different socioeconomic group. Consumer Price Index for Industrial Workers (CPI-IW), Consumer Price Index for Agricultural Laborers (CPI-AL), Consumer Price Index for Rural Laborers (CPI-RL), and Consumer Price Index for Urban Non-Manual Employees (CPI-UNME) were the four indices.
- CPI is now using a new series based on the base year 2012=100for all of India as well as States/UTs separately for rural, urban, and combined. Consumer Price Indices are published by the Central Statistics Office (CSO), Ministry of Statistics and Program Implementation (MOSPI).
WHOLE SALE PRICE INDEX (WPI)
- In India, this is the most widely used method for calculating the inflation rate. The Wholesale Price Index is the index used to calculate wholesale inflation (WPI).
- This rate of inflation is commonly referred to as headline inflation. The Office of Economic Advisor, Ministry of Commerce and Industrypublishes the WPI. The base year is aligned with CPI as 2012=100.
- Prior to 2014, the RBI used WPI to make the majority of its policy decisions. However, the WPI-based inflation calculation was not false proof. WPI displays the total price of a commodity basket of 697 items.
- The RBI shifted to CPI for policy decisions beginning in 2014.
PRODUCER PRICE INDEX
- The Producer Price Index or PPI is an index that measures the average price change of goods and services. It can be calculated either when the goods leave the place of production or as they enter the production process.
- In the case where the goods leave the production place, it is known as Output PPI.
- Similarly, Input PPIis when goods enter the production process.
- The PPI measures price movements from the seller’s point of view. Conversely, the consumer price index (CPI), measures cost changes from the viewpoint of the consumer. In other words, this index tracks changes to the cost of production.
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