Consumer Price Index (CPI)

Consumer Price Index (CPI):
  • Consumer Price Index (CPI) is based on the final prices of goods at the retail level.
  • Because of the wide disparities in the consumption baskets for different segment of consumers, India has adopted four CPIs.
    • CPI (Industrial Workers)
    • CPI (Urban Non- Manual Employees)
    • CPI (Agricultural Labour)
    • CPI (Rural Worker)
  • In India, RBI uses CPI (combined) released by CSO for inflation purpose with base year as 2012.
  • The number of items in CPI basket include 448 in rural and 460 in urban.
  • The headline Consumer Price Index (CPI) was made the nominal anchor for monetary policy, replacing the Wholesale Price Index(WPI) as per the recommendations of the Urjith Patel committee in 2014.
  • CPI data is released on monthly basis by CSO under Ministry of Statistics and Policy Implementation.
  • The Labour and Employment Ministry revised the base year of the Consumer Price Index for Industrial Workers (CPI-IW) from 2001 to 2016.
How is CPI calculated?
  • The Consumer Price Index or CPI assesses the changes in the price of a common basket of goods and services by comparing with the prices that are prevalent during the same period in a previous year.
  • The formula for calculating CPI is:
CPI = (Cost of market basket in a given year / Cost of market basket in base year) x 100
Types of CPI:
  • CPI for Industrial Workers (CPI-IW):
    • It tries to measure the alterations over a time period on the prices of a fixed basket of goods and services utilised by Industrial Workers.
    • The target group would be an average working-class family from any of these seven sectors of the economy ranging from factories, mines, plantation, motor transport, port, railways to electricity generation and distribution.
    • Compiled by the Labour Bureau.
  • CPI for Agricultural Labourers (CPI-AL)
    • This data is used to revise minimum wages for agricultural labour in different States.
    • Compiled by the Labour Bureau.
  • CPI for Rural Labourer (CPI-RL)
    • Compiled by the Labour Bureau.
  • CPI ( Urban Non-Manual Employees) (CPI-UNME)
    • The Central Statistics Office (CSO) which is now the National Statistical Office (NSO) compiles this data

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