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Consider the following statements: 1. The weightage of food in Consumer Price Index (CPI) is higher than that in Wholesale Price Index (WPI). 2. The WPI does not capture changes in the prices of services, which CPI does. 3. Reserve Bank of India has now adopted WPI as its key measure of inflation and to decide on changing the key policy rates. Which of the statements given above is/are correct?

Consider the following statements: 1. The weightage of food in Consumer Price Index (CPI) is higher than that in Wholesale Price Index (WPI). 2. The WPI does not capture changes in the prices of services, which CPI does. 3. Reserve Bank of India has now adopted WPI as its key measure of inflation and to decide on changing the key policy rates. Which of the statements given above is/are correct? Correct Answer 1 and 2 only

The correct answer is 1 and 2 only.

  • The weightage of items in WPI is as follows-
    • Primary article  - 22.62 %
    • Fuel and Power - 13.51 %
    • Manufactured goods - 64.23 %
  • While weightage of items in CPI is as follows-
    • Food and Beverages – 45.86
    • Housing – 10.07
    • Fuel and Light – 6.84
    • Clothing and Footwear – 6.53
    • Pan, tobacco and intoxicants – 2.38
    • Miscellaneous – 28.32

Hence statement 1 is correct.

Additional Information

WPI CPI
Weights of items are based on production values. Weight is based on average household expenditure taken from consumer expenditure data.
Weightage of food group - 24.4% Weightage of food group is 39.06%
It does not include services It includes services, hence statement 2 is correct.
It reflects a change in averages prices for bulk sale of commodities at the wholesale level It reflect the average change in prices at retail level paid by consumer

 Key Points

  • The Reserve Bank of India (RBI) Governor, Raghuram Raja in 2014 announced that the central bank had adopted the new Consumer Price Index (CPI) (combined) as the key measure of inflation. Hence statement 3 is incorrect.

Related Questions

Consider the following statements with respect to Consumer Price Index and Wholesale Price Index in India: 1. The WPI is calculated for only goods and CPI is calculated for both goods and services.  2. The WPI is published by the Office of the Economic Advisor in the Ministry of Commerce and Industry while the CPI is published by the Central Statistical Office. 3. The WPI is published on a weekly basis for primary articles and fuel and power and is published monthly for the rest of the items, whereas the CPI is released on a monthly basis. 4. The WPI measures inflation in the initial stages of the supply chain whereas the CPI measure inflation in the later stages of the supply chain. Which among the above given statements are correct?
Which of the following correctly explains the difference between WPI and CPI inflation? 1. CPI accounts for the services too unlike WPI. 2. CPI measures inflation down to the retail consumer level, unlike WPI. 3. Both indicators can be used for the measurement of inflation. Choose the correct answer using the codes below:
Consider the following statements regarding the measurement of rate of inflation.
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Statement II A price index is a measure of the average level of prices.
Statement III Price index shows the exact price rise or fall of a single good.
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Consider the statements: RBI uses inflation targets to decide its various monetary policy rates.  RBI only considers only CPI for inflation targeting. RBI uses CPI along with WPI for inflation targeting. Inflation targeting guarantees economic stability in a country. Which of the following statements are true?
Which of the following is correct about WPI (Wholesale Price Index) related to inflation? (A) It measures the wholesale prices on a weekly basis. (B) It focuses on both goods as well as services. (C) t measures the wholesale prices on a monthly basis. (D) It focuses only on goods, not on services.
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With reference to India, consider the following statements: 1. The Wholesale Price Index (WPI) in India is available on a monthly basis only. 2. As compared to Consumer Price Index for Industrial Workers (CPI(IW)), the WPI gives less weight to food articles. Which of the statements given above is/are correct?
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