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Inflation BY AYUSSH SANGHI How to measure Inflation? - Part 4.8
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How to measure Inflation? Now the next big questions arises, "What are the ways to measure inflation?" We use certain price indexes to measure or calculate inflation. These indices are used to measure overall price levels. . Example: WPI and CPI
Wholesale Price Index (WPI) The above mentioed index represents the price of various goods, 676 items, at a wholesale stage. The goods that are sold in bulk and traded between organizations/ wholesalers instead of consumers. WPI is used as a measure of inflation in some economies like India
Wholesale Price Index (WPI) Headline inflation in India is measured in terms of Wholesale Price Index (WPI) Office of the Economic Adviser, Department of Industrial Policy & Promotion, Ministry of Commerce & Industry is entrusted with the task of releasing this index.
Importance of Wholesale Price Index (WPI) WPI is an important statistical indicator as various policy decisions of the Government: Inflation management, monitoring of prices of essential commodities. . Even though WPI was prepared on a weekly basis for a number of decades, India shifted to monthly calculation of the WPI in 2009
Limitations of Wholesale Price Index(W Limitations of Wholesale Price Index (WPI) Bdri ation oranasort.acnt services such as FHealth Im s such as Health, IT, Education, transport. . It does not account for the products of the unorganised sector in India, which constitutes about 35% of the manufactured output of the Indian economy.
Consumer Price Index (CPI) A price index computed using a bundle that is meant to represent the "market basket" purchased by a typical consumer. The CPI is calculated by taking into account price changes for each item in the basket of goods and averaging them. Majorly changes in CPI are used to assess price changes associated with the cost of living.
Series of Consumer Price Index (CPI) We follow four distinct series of CPI that are used for monitoring retail price movements on a monthly basis. . We follow four distinct series of CPI that are used for monitoring retail price These are: Consumer Price Index for Industrial Workers, CPI (IW) Consumer Price Index for Agricultural Labourers, CPI (AL) and Consumer Price Index for Urban Non - Manual Employees, CPI (UNME) . Consumer Price Index for Industrial Workers, CPI (IW) . Consumer Price Index for Rural Workers, CPI (RW)
CPI (Industrial Workers) The Consumer Price Index for the industrial workers (CPI-IW) has 260 items (plus the services) in its basket with 2001 as the base year (the first base year was 1958-59) The data is collected with one month's frequency and the index has a time lag of one month