Published on: June 7, 2021

CONSUMER PRICE INDEX

CONSUMER PRICE INDEX

Sovetsk What : It measures price changes from the perspective of a retail buyer.

Gapyeong Details

  • It is released by the National Statistical Office (NSO).
  • The CPI calculates the difference in the price of commodities and services such as food, medical care, education, electronics etc, which Indian consumers buy for use.
  • The CPI has several sub-groups including food and beverages, fuel and light, housing and clothing, bedding and footwear.
  • Four types of CPI are as follows:
    • CPI for Industrial Workers (IW).
    • CPI for Agricultural Labourer (AL).
    • CPI for Rural Labourer (RL).
    • CPI (Rural/Urban/Combined).
  • Of these, the first three are compiled by the Labour Bureau in the Ministry of Labour and Employment. Fourth is compiled by the National Statistical Office (NSO) in the Ministry of Statistics and Programme Implementation.
  • Base Year for CPI is 2012.
  • The Monetary Policy Committee (MPC) uses CPI data to control inflation.

Why is it important : The retail inflation is measured by the Consumer Price Index (CPI).

What is in news : Retail inflation hit a six-month high of 6.3% in May, owing to a persistent rise in fuel and edible oil prices

How is the index caluculated :

  • The CPI is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.
  • It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. Changes in the CPI are used to assess price changes associated with the cost of living.

The CPI is one of the most frequently used statistics for identifying periods of inflation or deflation.