Current Status of Retail Inflation in India
• India’s retail inflation inched up to an eight-month high of 6.07% in February from 6.01% in January, with rural India experiencing a sharper price rise at 6.38%.
• For urban consumers, the inflation rate, in fact, fell from 5.91% in January to 5.75% in February.
What is Inflation?
• Inflation refers to the rise in the prices of most goods and services of daily or common use, such as food, clothing, housing, recreation, transport, consumer staples, etc.
• In other words we can say inflation indicates the declining value or decreasing purchasing power of a unit of a country’s currency.
What are the two indices to measure inflation?
1. Wholesale Price Index –
• WPI, tracks inflation at the producer level
• Published by the Office of Economic Adviser, Ministry of Commerce and Industry.
• Major criticism for this index is that the general public does not buy products at wholesale price.
2. Consumer Price Index
• CPI captures changes in prices levels at the consumer level.
• It is released by National Statistical Office (NSO)
Four types of CPI are as follows:
o CPI for Industrial Workers (IW).
o CPI for Agricultural Laborer (AL).
o CPI for Rural Laborer (RL).
o CPI (Rural/Urban/Combined).
Source: THE HINDU