Inflation Rate In India
Inflation is crucial to determine one’s purchasing power. In other words, inflation is a measure
that causes the prices of both goods and services to rise over time and buyers will feel the pinch
as it affects their personal finance, particularly spending and buying habits.
How to Calculate Inflation Rate In India?
There are two indices that are used to measure inflation in India — the consumer price index (CPI)
and the wholesale price index (WPI). These two measure inflation on a monthly basis taking into
account different approaches to calculate the change in prices of goods and services. The study
helps the government and the Reserve Bank of India (RBI) to understand the price change in the
market and thus keep a tab on inflation.
The CPI, which refers to the Consumer Price Index, analyzes the retail inflation of goods and
services in the economy across 260 commodities. The CPI-based retail inflation considers the change
in prices at which the consumers buy goods. The data is collected separately by the Ministry of
Statistics and Program Implementation and the Ministry of Labour.
The WPI, which refers to the Wholesale Price Index, analyzes the inflation of only goods across 697
commodities. The WPI-based wholesale inflation considers the change in prices at which consumers buy
goods at a wholesale price or in bulk from factory, mandis, etc.