Does RBI use WPI or CPI?

Does RBI use WPI or CPI?

There are two measures of inflation in India, Wholesale Price Index (WPI) and the Consumer Price Index (CPI). CPI is tracked by RBI and it measures the changes over time in general level of retail prices of selected goods and services that households purchase for consumption.

Which price index is used by RBI?

Consumer Price Index (CPI)
The Wholesale Price Index (WPI) was the main index for measurement of inflation in India till April 2014 when RBI adopted a new Consumer Price Index (CPI) (combined) as the key measure of inflation.

Which inflation index is used by RBI?

Inflation rate will be based on the final combined Consumer Price Index [(CPI) base: 2010=100]. The final combined CPI will be used as reference CPI with a lag of three months.

Does RBI adopted WPI?

Headline inflation based on Consumer Price Index-Combined (CPI-C) has been adopted as the key measure of inflation by the RBI, as mentioned in the monetary policy statement of April 2014. Earlier, the official measure of inflation in India was derived based on the Wholesale Price Index (WPI).

Why RBI chose CPI over WPI?

A combination of core wholesale price index (WPI) and core CPI inflation would be an improvement over RBI currently targeting headline CPI inflation. This would help in balancing the interests of manufacturers and consumers. This measure of inflation also has a low standard deviation and a low mean inflation rate.

Which is greater WPI or CPI?

The WPI data comes right after the retail (CPI) inflation scaled a four-month peak of 5.52 per cent in March. In recent years, the WPI and CPI have shown a degree of dissonance, given that the WPI has a higher weight of manufactured goods and the CPI has a greater constitution of food items.

What is WPI and CPI?

WPI vs CPI. The two most-often used inflation rates in the country are the year-on-year. > the wholesale price index (WPI) based inflation rate and. > the consumer price index (CPI) based inflation rate. The former is called the wholesale inflation rate and the latter is called the retail inflation rate.

What is difference between CPI and WPI?

WPI measures the average change in prices of goods at the wholesale level while CPI calculates the average change in prices of goods and services at the retail level.

Does WPI impact CPI?

Lag in timing: It is also important to note that WPI index is usually the lead index and CPI lags behind. It takes time for the wholesale prices to pass through to retail. WPI numbers are updated on a weekly basis whereas CPI numbers are updated on a monthly basis.

What are the uses of the CPI?

CPI can be used to calculate the cost of living of the people of a country and also the changes in the purchasing power of the currency of a nation. CPI detects the price changes of the items falling under the common basket and by averaging those prices.

Why CPI is used instead of WPI?

Mainly WPI focus on prices of goods traded between business houses whereas CPI focuses on prices of goods purchased by consumers. As CPI provides more clarity about inflation and its economy on the overall economy hence CPI is widely used for calculating inflation as compared to WPI.

How does the RBI monitor price stability?

Price stability as defined by ‘low and stable inflation’ being one of the key objectives, the Reserve Bank monitors a range of price indices both at aggregate and disaggregated levels [RBI (2006)].

What is the Carli index used in WPI?

The WPI (as also CPI-combined for base 2010=100) uses Carli index (see reference [9] and [23]), wherein simple arithmetic mean of price relatives are used to compute elementary indices.

What is the difference between CPI-IW and WPI?

As noted in Section II, WPI and CPI-combined (2010=100) both use Carli index, i.e., average of ratio of price relatives, for arriving at elementary indices; whereas CPI-IW uses Dutot index, i.e. ratio of average prices.

Is CPI better than WPI in capturing market dynamics?

MUMBAI: Reserve Bank Governor D Subbarao on Tuesday said consumer price index (CPI) works better than wholesale price index (WPI) in capturing market dynamics and arriving at a more realistic inflation forecast.