WHAT IS INFLATION
INFLATION: It is an economic condition in which prices of goods and services rise and the value of money falls or money circulation exceeds the production of goods and services.
DISINFLATION: It refers to a situation in which prices are brought down moderately from their higher level without any adverse impact on production and employment.
LEARNING FROM HOME/ WITHOUT CLASSES/ BASICS
Consumer Price Index(CPI) looks at the price at which the consumer buys goods, the Wholesale Price Index(WPI) tracks prices at the wholesale, or factory gate/mandi levels.
WPI only tracks basic prices devoid of transportation cost, taxes and the retail margin etc. And that WPI pertains to only goods, not services.
The CPI is a measure that assesses the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, purchased by households.
The Difference between WPI and CPI
| WPI | CPI |
| Calculates the average change in prices of commodities at the wholesale level.( First stage of a transaction) | At the retail level.( Final stage of a transaction) |
| Data published By: Office of Economic Advisor (Ministry of Commerce & Industry) | Central Statistics Office (Ministry of Statistics and Programme Implementation) & Labour Bureau |
| Covers Goods only | Goods and Services both |
| Manufacturers and wholesalers (Producer Level) | Consumers (Consumer Level) |
| Manufacturing inputs and intermediate goods like minerals, machinery basic metals, etc. | Education, communication, transportation, recreation, apparel, foods and beverages, housing and medical care |
| Base Year:2011-12 | 2012 |
In April 2014, the RBI had adopted the CPI as its key measure of inflation.( Urjit R. Patel Committee report recommendations
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