- July 31, 2021
- Posted by: admin1
- Category: DPN Topics
Context : The all India Consumer Price Index for Industrial Workers (CPI-IW) for June increased by 1.1 points and stood at 121.7. It increased by 0.91 per cent than May and 0.61 per cent when compared to June 2020.
- CPI is a measure of retail inflation (WPI measure wholesale inflation) in economy. It is calculated on monthly basis. There is also an annual report with a 1-month lag.
- Consumer Price Index or CPI is the measure of changes in the price level of a basket of consumer goods and services bought by households. CPI is a numerical estimation calculated using the rates of a sample of representative objects the prices of which are gathered periodically.
- The CPI captures changes in price level at the consumer level.
- Changes in prices at the producer level are tracked by the Wholesale Price Index (WPI).
- CPI can capture the change in the prices of services which the WPI cannot.
Various Indices of CPI are:
- CPI – Industrial Workers (CPI -IW): It tries to measure the alterations over a time period on the prices of a fixed basket of goods and services utilised by Industrial Workers.
- CPI – Agricultural Labourers (CPI -AL): This index measures the change in the price of commodity basket consumed by the agricultural labourers. It is this used to revise minimum wages for agricultural labour in different States.
- CPI – Rural Labourers: This index measures the change in the price of commodity basket consumed by the rural labourers.
- The above indices are published monthly by Labour Bureau under the Ministry of Labour and Employment for all India as well as States and Union Territories.
- Since the above three indices covered only a segment of the population and not the overall nation, we Designed three more indices of CPI.
- CPI – Rural: This index measures the change in the price of commodity basket consumed by the rural population
- CPI – Urban: This index measures the change in the price of commodity basket consumed by urban population
- CPI – Combined: It is computed by combining CPI Rural and CPI Urban Index The base year for the above three indices is 2011-12 and are published monthly by the National Statistical Office (NSO), Ministry of Statistics and Programme Implementation.
Why CPI is important?
- Tracks inflation in economy.
- RBI and other estimating agencies study CPI so as to understand the price change of various commodities and keep a tab on inflation.
- It also gives an idea of cost of living.