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Consumer price index:

  • It is the measure of changes in the price level of a basket of consumer goods and services, both which are bought by households. 

  • CPI is a numerical estimation calculated using the rates of a sample of representative objects the prices of which are gathered periodically.

  • The CPI calculates changes in prices at the consumer level.

  • Changes in prices at the producer level are calculated/ monitored by the Wholesale Price Index (WPI).

  • India has adopted four type CPIs:

    • CPI (Industrial Workers) 

    • CPI (Urban Non- Manual Employees)

    • CPI (Agricultural Labour)

    • CPI (Rural Worker)

  • To calculate inflation, RBI in India uses CPI (combined) released by CSO with base year as 2012.

  • The number of items in CPI basket are 448 in rural basket and 460 in urban basket.

  • The new CPI released in 2017 has these sub-groups:

    • food and beverages

    • fuel and light

    • housing and clothing

    • bedding and footwear.

WPI: Wholesale Price Index

Wholesale Price Index (WPI) is based on the price  prevailing in the wholesale markets i.e. at which bulk  transactions are made.

  • Components of WPI:

    • Manufactured products: 65% approx (64.2% now)

    • Primary products: 20% approx (22.6% now)

    • Fuel and power: 15% approx (13.1% now)

  • The WPI basket earlier included 676 and now increased to 697 commodities in total.

  • It is calculated by the Ministry of commerce and industry with base year as 2004-05 (Changed to 2011-12 now).

New WPI Series

  • Base year was changed from 2004-05 to 2011-12

The  number of items were also increased in the new series of the WPI from 676 to 697

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