Indian Economy: Inflation & Indices

Inflation refers to the sustained increase in the general price level of goods and services. In India, it is primarily measured using two main indices: CPI and WPI.

Consumer Price Index (CPI)

• Base Year: Currently 2012. It measures price changes from the perspective of the retail buyer.
• Released by: National Statistical Office (NSO), Ministry of Statistics and Programme Implementation.
• MPC Target: The RBI uses CPI (Combined) as the anchor for its monetary policy targeting.

Wholesale Price Index (WPI)

• Base Year: Currently 2011-12. It tracks prices at the factory gate or wholesale level.
• Components: Consists of Primary Articles, Fuel & Power, and Manufactured Products (highest weightage).
• Key Difference: Unlike CPI, WPI does not include the prices of services.
• Released by: Office of Economic Adviser, Ministry of Commerce and Industry.

Question for you: What term is used to describe a situation where inflation is high, economic growth is slow, and unemployment remains steadily high?

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