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Question

Calculate consumer price index number for the following data by aggregate expenditure and family budget Method.
Expenses Weights Price (in ₹) Base Year Price (in ₹) Current year
Food 45 300 350
Rent 20 200 225
Fuel 8 100 110
Clothing 10 150 175
Misc. 17 250 300

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Solution

Aggregate expenditure Method
Expenses Price in Base Year
(p0)
Price in Current Year
(p1)
Quantity
(q0)
p0q0 p1q0
Food 300 350 45 13500 15750
Rent 200 225 20 4000 4500
Fuel 100 110 8 800 880
Clothing 150 175 10 1500 1750
Misc. 250 300 17 4250 5100
Σp0q0 = 24050 Σp1q0 = 27980

Consumer price index for the current year

=Σp1q0Σp0q0×100=2798024050×100=116.34
Family Budget Method

Expenses Price in Base Year
(p0)
Price in Current Year
(p1)
R=p1p0×100 Quantity
(q0)
p0q0
(W)
RW
Food 300 350 116.67 45 13500 1575045
Rent 200 225 112.5 20 4000 450000
Fuel 100 110 110 8 800 88000
Clothing 150 175 116.67 10 1500 175005
Misc. 250 300 120 17 4250 510000
ΣW= 24050 ΣRW = 2798050

Consumer price index for the current year

=ΣRWΣW=279805024050=116.34

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