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Inflation BY AYUSSH SANGHI How to measure Inflation? - Part 4.9
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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 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 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.
CPI (Industrial Workers) This index specifies the government employees (apart from banks' and embassies' personnel) The wages/salaries of the central government employees are revised on the basis of the changes occurring in this index, the dearness allowance (DA) is announced twice a year. is the CPI (IW)
CPI (Urban Non-Manual Employees) It has 1984-85 as the base year and 146-365 commodities in the basket for which data is collected monthly with two weeks' time lag. This price index has limited use and is basically used for determining dearness allowances (DAs) of employees of some foreign companies operating in India (i.e. airlines, cmansrceing insurance, embasies and other financial services)
CPI (Urban Non-Manual Employees) . It is used under the Income Tax Act to determine capital gains and by the CSO (Central Statistical Organisation) for deflating selected service sector's contribution to the GDP at factor cost and current prices to calculate the corresponding figure at constant prices.
CPI (Agricultural Labour) The Consumer Price Index for Agricultural Labourers (CPI-AL) has 1986-87 as its base year with 260 commodities in its basket. The data is collected with a monthly frequency and has three weeks time lag. This index is used for revising minimum wages for agricultural labourers in different states.
CPI (Rural Worker) There is yet another Consumer Price Index for the Rural Labourers (CPI-RL) with 1983 as the base year, data is collected on monthly frequency with three weeks' time lag, and its basket contains 260 commodities.