Consumer Price Index (CPI)

Consumer Price Index (CPI):

Consumer Price Index (CPI) is based on the final prices of goods at the retail level.
Because of the wide disparities in the consumption baskets for different segment of consumers, India has adopted four CPIs.
- CPI (Industrial Workers)
- CPI (Urban Non- Manual Employees)
- CPI (Agricultural Labour)
- CPI (Rural Worker)
In India, RBI uses CPI (combined) released by CSO for inflation purpose with base year as 2012.
The number of items in CPI basket include 448 in rural and 460 in urban.
The headline Consumer Price Index (CPI) was made the nominal anchor for monetary policy, replacing the Wholesale Price Index(WPI) as per the recommendations of the Urjith Patel committee in 2014.
CPI data is released on monthly basis by CSO under Ministry of Statistics and Policy Implementation.
The Labour and Employment Ministry revised the base year of the Consumer Price Index for Industrial Workers (CPI-IW) from 2001 to 2016.

How is CPI calculated?

The Consumer Price Index or CPI assesses the changes in the price of a common basket of goods and services by comparing with the prices that are prevalent during the same period in a previous year.
The formula for calculating CPI is:

CPI = (Cost of market basket in a given year / Cost of market basket in base year) x 100

Types of CPI:

CPI for Industrial Workers (CPI-IW):
- It tries to measure the alterations over a time period on the prices of a fixed basket of goods and services utilised by Industrial Workers.
- The target group would be an average working-class family from any of these seven sectors of the economy ranging from factories, mines, plantation, motor transport, port, railways to electricity generation and distribution.
- Compiled by the Labour Bureau.
CPI for Agricultural Labourers (CPI-AL)
- This data is used to revise minimum wages for agricultural labour in different States.
- Compiled by the Labour Bureau.
CPI for Rural Labourer (CPI-RL)
- Compiled by the Labour Bureau.
CPI ( Urban Non-Manual Employees) (CPI-UNME)
- The Central Statistics Office (CSO) which is now the National Statistical Office (NSO) compiles this data