Why was CPI chosen in India instead of WPI?
Why was CPI chosen in India instead of WPI?
The inclusion of services in WPI is the primary justification for replacing CPI. Currently, services make up over 60% of GDP, with a significant percentage of these services not being transferred internationally. While CPI includes services like healthcare, education, transportation, and tourism, WPI does not.
In order to determine the proper characteristics of both rural and urban areas, the Consumer Price Index (CPI) was used to calculate the same for rural and urban areas of the country.
More:
The CPI provides an overview of retail inflation, and prices are affected by supply and demand from consumers. It serves as a more accurate gauge of inflation than the WPI for monetary policy and interest rate decisions.
The wholesale price index, i.e., WPI, means the wholesale price index, which contains the price of the goods, i.e., the commodity, being sold. The wholesaler calculates the wholesale price index based on the shoe price. It tells us the inflation rate, although it does not take pain into account, whereas mostly we take the CPI, which means the consumer price index.
Inflation Rate:
The Definition of Inflation: Continuous price increases in products and services over time constitute inflation in the market. As a result, when there is inflation, the currency’s value falls.
The wholesale price index, consumer price index, producer price index, commodity price index, cost of living index, capital goods price index, and GDP deflator are just a few of the several methodologies used to determine inflation. However, the consumer price index and the wholesale price index are the two that are most frequently used globally.
The Ministry of Statistics and Program Implementation of the Central Government publishes consumer price index-based inflation data for India once a month. The National Sample Survey Organization (NSSO) collects the price information for goods and services for this index from a sample of cities, while the Department of Posts gathers the information for rural areas.
.jpeg)
