Current Status of Retail Inflation in India

Context:

• 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

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