Question

The recent fall in international crude oil price has the highest impact on which of the following indicators?

A Wholesale Price Index (WPI) Correct Answer Incorrect Answer
B Consumer Price Index (CPI) Correct Answer Incorrect Answer
C Core inflation Correct Answer Incorrect Answer
D Index of Industrial Production (IIP) Correct Answer Incorrect Answer

Solution

· The recent fall in international crude price has the highest impact on WPI. It depends on the weightage of fuel component among different indicators. WPI has the highest weightage of fuel component around 40 percent, whereas for CPI the fuel component consist of firewood, electricity and dung cake. Hence, impact of crude is minimal.
· Core inflation is derived after deducting short term volatile commodities like food and energy. Hence, it experiences minimum impact.

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