Consumer Price Index

#GS3 #Economy


  • India’s retail inflation reduced to 5.3% in August from 5.6% in July. 
  • Food price inflation has got reduced to to 3.11% from nearly 4% in July. 
  • This marks the second month of marginal moderation in the Consumer Price Index (CPI), keeping retail inflation below the central bank’s upper tolerance threshold of 6% after hitting 6.3% in May and June this year. 

What is Consumer Price Index?

  • Consumer Price Index or CPI is the measure of changes in the price level of a basket of consumer goods and services bought by households. 
  • It measures price changes from the perspective of a retail buyer. 
  • It measures changes over time in the level of retail prices of selected goods and services on which consumers of a defined group spend their incomes. 
  • CPI is a numerical estimation calculated using the rates of a sample of representative objects the prices of which are gathered periodically. 
  • Depending upon the socio-economic differentiations among consumers, India has four differing sets of CPI with some differentials in the basket of commodities allotted to them.
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