Question
About inflation measurement in India, which of
the following statement/s is/are correct? i. CPI is the index used for measuring inflation ii. Higher the WPI stronger the affect of consumer inflation iii. Fuel and Light carries maximum weight in the CPI basketSolution
India used WPI as the measure for inflation but from April 2014 new CPI (combined) is declared as the new standard for measuring inflation. CPI numbers are typically measured monthly, and with a significant lag, making them unsuitable for policy use. India uses changes in the Consumer Price Index (CPI) to measure its rate of inflation.
There are total 676 items in WPI, which are divided into three categories - Primary Articles (20%) Fuel & power (15%) and Manufactured Products (65%). The number of items in CPI basket include 448 in rural and 460 in urban. Food and beverages carries maximum (54%) weight in the CPI
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