Inflation: WPI & CPI
Economy Advanced · मुद्रास्फीति: WPI और CPI
📋Quick Overview
Inflation is the sustained rise in the general price level over time. India measures inflation primarily through two indices: CPI (Consumer Price Index) measuring retail prices and WPI (Wholesale Price Index) measuring wholesale prices. Since 2016, India uses CPI-based inflation targeting with a target of 4% (±2%). The RBI's MPC adjusts interest rates to maintain this target.
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Core Inflation = CPI excluding food and fuel; more stable and policy-relevant. Headline Inflation = overall CPI including food and fuel. India's food inflation is highly volatile due to monsoon dependency — food has 45.86% weight in CPI.
📖CPI vs WPI — Comparison
| Feature | CPI (Consumer Price Index) | WPI (Wholesale Price Index) |
|---|---|---|
| What it measures | Retail prices (what consumers pay) | Wholesale/factory gate prices |
| Published by | NSO (National Statistical Office) | DPIIT (Dept for Promotion of Industry) |
| Base Year | 2012 | 2011-12 |
| Frequency | Monthly (released ~12th of next month) | Monthly (released ~14th of next month) |
| Used for | Monetary policy (inflation targeting), DA revision | Procurement pricing, industrial input prices |
| Services included | Yes (services like rent, healthcare) | No (only goods; no services) |
📖CPI & WPI Component Weights
| Index | Component | Weight (%) |
|---|---|---|
| CPI | Food & Beverages | 45.86% |
| CPI | Housing | 10.07% |
| CPI | Fuel & Light | 6.84% |
| CPI | Miscellaneous (clothing, health, education, etc.) | 28.32% |
| WPI | Primary Articles (agri+minerals) | 22.62% |
| WPI | Fuel & Power | 13.15% |
| WPI | Manufactured Products | 64.23% |
- •Stagflation: Simultaneous inflation + economic stagnation (high unemployment + rising prices); example: India late 1970s, global 1970s oil crisis
- •Deflation: Sustained fall in price level; can be harmful as it delays purchases and reduces investment; Japan experienced prolonged deflation in 1990s-2000s