Measurement Of Inflation


 
 
Concept Explanation
 

Measurement Of Inflation In India

  • Inflation in India is measured through two major indices namely Consumer Price Index (CPI) and Wholesale Price Index (WPI). The most important index is All India CPI by CSO. Labor Bureau prepares three CPls for specific occupational groups. WPl is prepared by Office of Economic Affairs, Ministry of Commerce and Industry.
  • The WPI, where prices are quoted from wholesalers, is constructed by Office of Economic Affairs, Ministry of Commerce and Industries. In the case of CPI (prices quoted from retailers), there are several indices to measure it: CPI for industrial laborers (CPI - IL), agricultural laborers (CPI - AL) and rural laborers (CPI - RL) besides an all India CPI.
  • In addition, Gross Domestic Product (GDP) deflector and Private Final Consumption Expenditure (PFCE) deflector from the National Accounts Statistics (NAS) provide an implicit economy - wide inflation estimate.
  • A. Consumer Price Index

    Two Ministries - Ministry of Statistics and Program me Implementation (MOSPI) and Ministry of Labor and Employment (MOLE) are engaged in the construction of different CPls for different groups/sectors. CPI inflation is also called as retail inflation as the prices are quoted from retailers. Following are the various CPls.

    (a) CPI for all India or CPI combined

    (b) CPI for Agricultural Laborers (AL)

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    Sample Questions
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    Question : 1

    To combat rising inflation, RBI has to do which of the following activities ?

    Right Option : D
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