Q. Consider the following statements with reference to the inflation measurement in the Indian Economy:
Which of the statements given above is/are correct?
Q. Consider the following statements with reference to the inflation measurement in the Indian Economy:
Which of the statements given above is/are correct?
The correct option is A 1 only
Explanation:
Statement 1 is correct: The consumer price index (CPI) is a broad index that is used to estimate price changes in a basket of goods and services that represents consumer spending. . The calculation for the estimation of CPI involves various categories and subcategories that have been made for classifying consumption items and on the basis of consumer categories like urban or rural.
Based on these indices and sub-indices obtained, the final overall index of the price is calculated mostly by national statistical agencies. It gives an idea of the cost of living.
Components of the basket of articles in CPI:
Food & Beverages (45.86%) Cereals, meat, fish, egg, milk etc Miscellaneous (28.32%) Health, transport and communication, education, recreation etc Housing ((10.07%) Only in urban Fuel & Light (6.84%) Fuel and light Clothing & Footwear (6.53%) Clothing and footwear Pan Tobacco and Intoxicants (2.38%) Pan Tobacco and Intoxicants
Statement 2 is incorrect: Wholesale Price Index, measures the changes in the prices of goods sold and traded in bulk by wholesale businesses to other businesses. New Series of WPI-With an aim to align the index with the base year of other important economic indicators such as GDP and IIP, the base year was updated to 2011-12 from 2004-05 for the new series of Wholesale Price Index (WPI), effective from April 2017.
Major components of WPI
- Manufacturing (64%) -Chemicals, textiles, wood and paper, metals and alloys, Beverages, tobacco etc
- Primary Articles (22%) -Food articles, non-food articles, minerals (crude petroleum)
- Fuel (13%) Electricity, coal, mineral oils, LPG
Explanation:
Statement 1 is correct: The consumer price index (CPI) is a broad index that is used to estimate price changes in a basket of goods and services that represents consumer spending. . The calculation for the estimation of CPI involves various categories and subcategories that have been made for classifying consumption items and on the basis of consumer categories like urban or rural.
Based on these indices and sub-indices obtained, the final overall index of the price is calculated mostly by national statistical agencies. It gives an idea of the cost of living.
Components of the basket of articles in CPI:
Food & Beverages (45.86%) Cereals, meat, fish, egg, milk etc Miscellaneous (28.32%) Health, transport and communication, education, recreation etc Housing ((10.07%) Only in urban Fuel & Light (6.84%) Fuel and light Clothing & Footwear (6.53%) Clothing and footwear Pan Tobacco and Intoxicants (2.38%) Pan Tobacco and Intoxicants
Statement 2 is incorrect: Wholesale Price Index, measures the changes in the prices of goods sold and traded in bulk by wholesale businesses to other businesses. New Series of WPI-With an aim to align the index with the base year of other important economic indicators such as GDP and IIP, the base year was updated to 2011-12 from 2004-05 for the new series of Wholesale Price Index (WPI), effective from April 2017.
Major components of WPI
- Manufacturing (64%) -Chemicals, textiles, wood and paper, metals and alloys, Beverages, tobacco etc
- Primary Articles (22%) -Food articles, non-food articles, minerals (crude petroleum)
- Fuel (13%) Electricity, coal, mineral oils, LPG
