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Inflation BY AYUSSH SANGHI How to measure Inflation and Analysis? - Part 4.10
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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 (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.
Analysis of WPI and CPI WPI is used for measuring the rate of inflation. Main distinction between the two is that the WPI is purely a commodity index and does not take into account services for measuring inflation, whereas CPI (IW) includes both commodities and services, though the number of commodities covered by it is much smaller as compared to the WPI.
Analysis of WPI and CPI Besides, CPI (IW) is based on retail prices and hence captures the impact of prices of selected essential goods and services on the household budget.
Analysis of WPI and CPI . As compared to the WPI, the CPI has much larger weightage of primary articles, which is as high as 57 per cent. This implies that impact of food inflation is reflected much more prominently irn CPI than in WPI as WPI gives just 20 percent weightage to these articles. From above it can be inferred that seasonal fluctuation in the wipe,s of these commodites has relaively leser nftuence on