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Headline inflation

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change in price level at wholesale market, CPI measures the change in price  
 
change in price level at wholesale market, CPI measures the change in price  
 
level at retail level.</p>
 
level at retail level.</p>
<p>In India, headline inflation is measured through the WPI – which consists of  
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<p>In India, headline inflation is measured through the WPI (the latest base year 2011-12) – which consists of  
676 commodities (services are not included in WPI in India). It is measured on
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697 commodities (services are not included in WPI in India). It is measured on
 
<b>year-on-year</b> basis i.e., rate of change in price level in a given month  
 
<b>year-on-year</b> basis i.e., rate of change in price level in a given month  
 
vis a vis corresponding month of last year. This is also known as point to point  
 
vis a vis corresponding month of last year. This is also known as point to point  
 
inflation.</p>
 
inflation.</p>
 
<p>In India, there are three main components in WPI – Primary Articles (weight:  
 
<p>In India, there are three main components in WPI – Primary Articles (weight:  
20.12%), Fuel &amp; Power (weight: 14.91%) and Manufactured Products (weight:  
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22.62%), Fuel &amp; Power (weight: 13.15%) and Manufactured Products (weight:  
64.97). Within WPI, Food commodities (from which Food Inflation) have a combined
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64.23). Within WPI, Food  
weight of 24.31%. This includes “Food Articles” in the Primary Articles (14.34%)
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and “Food Products” in the Manufactured Products category (9.97%). Food  
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Inflation is also calculated on year-on-year basis.</p>
 
Inflation is also calculated on year-on-year basis.</p>
 
<p>Apart from WPI, CPI is also computed to capture inflation in India. In  
 
<p>Apart from WPI, CPI is also computed to capture inflation in India. In  
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==Contributed by==
 
==Contributed by==
 
* [http://www.ies.gov.in/myaccount-profile-view.php?memid=374 Shweta, IES(2008)]
 
* [http://www.ies.gov.in/myaccount-profile-view.php?memid=374 Shweta, IES(2008)]
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*Email- [mailto:r.shweta3@gmail.com r.shweta3@gmail.com]
  
[[Category:concepts|concepts]]
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[[Category:concepts|Headlineinflation]]

Latest revision as of 17:02, 13 May 2017

In general, reflects the rate of change in prices of all goods and services in an economy over a period of time. Every country has its own set of commodity basket to track inflation. While some countries use Wholesale Price Index (WPI) as their official measure of inflation and some others use the Consumer Price Index (CPI). The International Monetary Fund (IMF) statistics reveals that, while 24 countries use WPI as the official measure to track inflation, 157 countries use CPI. Conceptually these two measures of inflation stress different stages of price realization as well as composition: while WPI measures the change in price level at wholesale market, CPI measures the change in price level at retail level.

In India, headline inflation is measured through the WPI (the latest base year 2011-12) – which consists of 697 commodities (services are not included in WPI in India). It is measured on year-on-year basis i.e., rate of change in price level in a given month vis a vis corresponding month of last year. This is also known as point to point inflation.

In India, there are three main components in WPI – Primary Articles (weight: 22.62%), Fuel & Power (weight: 13.15%) and Manufactured Products (weight: 64.23). Within WPI, Food Inflation is also calculated on year-on-year basis.

Apart from WPI, CPI is also computed to capture inflation in India. In particular, four categories of CPI are computed – for Industrial Workers (CPI-IW), Urban Non-Manual Employees (CPI-UNME), Agricultural Labourers (CPI-AL) and Rural Labourers (CPI-RL). However, WPI is considered as the preferred measure of headline inflation due to its wider coverage. To overcome this lacuna, the Central Statistical Organization (on 18th February 2011) has introduced a new series of CPI (with 2010=100 as the base year), which would be calculated for all-India as well as States/UTs – with separate categorization for rural, urban and combined (rural + urban).


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