#GS3 #Economy #CPI
The Labour and Employment Ministry has revised the base year of the Consumer Price Index for Industrial Workers (CPI-IW) from 2001 to 2016 to reflect the changing consumption pattern, giving more weightage to spending on health, education, recreation and other miscellaneous expenses, while reducing the weight of food and beverages.
- The weight to food and beverage was reduced from 46.2% to 39%, while spending on housing increased from 15.2% to 17%.
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.
- 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.
- The Consumer Price Index for the industrial workers (CPI-IW) has 260 items (plus the services) in its basket with 2001 (now revised to 2016) as the base year.
- Dearness Allowance is announced twice a year based on this index. Pay Commission recommends pay revisions based on CPI(IW). Labour Bureau compiles CPI-IW.