GS-3, Economy Consumer Price Index (CPI) It measures price | Deepak UPSC Notes

GS-3, Economy

Consumer Price Index (CPI)

It measures price changes from the perspective of a retail buyer. It is released by the National Statistical Office (NSO).

The CPI calculates the difference in the price of commodities and services such as food, medical care, education, electronics etc, which Indian consumers buy for use.

The CPI has several sub-groups including food and beverages, fuel and light, housing and clothing, bedding and footwear.

Four types of CPI are as follows:

CPI for Industrial Workers (IW).

CPI for Agricultural Labourer (AL).

CPI for Rural Labourer (RL).

CPI (Rural/Urban/Combined).

Of these, the first three are compiled by the Labour Bureau in the Ministry of Labour and Employment. Fourth is compiled by the National Statistical Office (NSO) in the Ministry of Statistics and Programme Implementation.

Base Year for CPI is 2012.

The Monetary Policy Committee (MPC) uses CPI data to control inflation.

Wholesale Price Index (WPI)

It measures the changes in the prices of goods sold and traded in bulk by wholesale businesses to other businesses.

Published by the Office of Economic Adviser, Ministry of Commerce and Industry.

It is the most widely used inflation indicator in India.

Major criticism for this index is that the general public does not buy products at wholesale price.

The base year of All-India WPI has been revised from 2004-05 to 2011-12 in 2017.

CPI vs. WPI

WPI, tracks inflation at the producer level and CPI captures changes in prices levels at the consumer level.

WPI does not capture changes in the prices of services, which CPI does.

In April 2014, the RBI had adopted the CPI as its key measure of inflation.