CPI (CONSUMER PRICE INDEX)

TOPIC: Economy

Context- The all-India Consumer Price Index for Agricultural and Rural Labourers (CPI- AL & RL) continued to decrease in January.

The fall came from food group due to decrease in prices of pulses, mustard-oil, fresh ﬁsh, sugar, gur, onion, vegetables and fruits.
The fall/rise in index varied from State to State.

Concept-

Consumer Price Index:

It measures price changes from the perspective of a retail buyer.
It is released by the National Statistical Office (NSO).
It 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 changes in price over time for each item in the predetermined basket of goods and averaging them.
CPI is adopted as the key measure of retail inflation by the Reserve Bank of India in 2014.
India uses 2012 as the base year for calculating CPI.
At present, India has five consumer price indexes (CPIs), three of which are working-class specific. These are:
- CPI for Industrial Workers (IW).
- CPI for Agricultural Labourer (AL).
- CPI for Rural Labourer (RL).
These three indexes are compiled by the Labour Bureau in the Ministry of Labour and Employment.
CPIs AL and RL are used to fix minimum wages of agricultural labourers and rural unskilled employees.
The other two are CPI-Urban and CPI Rural. These two indexes are compiled by the National Statistical Office (NSO) in the Ministry of Statistics and Programme Implementation.
The combined rise in retail prices is captured by CPI Combined.
A committee set up by the National Statistical Commission (NSC) in 2005 under the recommendation of Dr C Rangarajan Commission, has suggested that CPI-Rural and CPI-Urban could be a substitute for CPI-AL/RL and CPI-IW, respectively.