- Consumer Price Index is an index which measures the weighted average of prices of a basket of consumer goods and services such as transportation, food and medical care.
- It is calculated by measuring price changes for each item in the predetermined basket of goods and services and averaging them.
How does the Consumer Price Index help?
- The Reserve Bank of India and other statistical agencies study CPI so as to understand the price change of various commodities and keep a tab on inflation.
- CPI is also a helpful pointer in understanding the real value of wages, salaries and pensions, the purchasing power of a country’s currency, and regulating prices.
Who maintains the Consumer Price Index in India?
- In India, different types of consumer price index numbers are released by the government which includes:
- CPI for Industrial Workers (IW)
- CPI for Agricultural Labourers (AL)
- CPI for Rural Labourers (RL)
- The Ministry of Labour & Employment collects the data for CPI (IW), CPI (AL) and CPI (RL) and compiles it.
- In addition to these, the National Statistical Office (NSO), Ministry of Statistics and Programme Implementation is releasing
- CPI for Rural
- CPI for Urban and
- CPI Combined (computed by combining CPI Rural and CPI Urban)
What is the base year of an Index?
- The CPI is calculated with reference to a base year, which is used as a benchmark. The price change pertains to that year.
- In India, the base year of the current series of CPI (IW) is 2016. The base year of CPI (AL) and CPI (RL) is 1986-87.
- For CPI Rural, Urban and Combined, the base year is 2011-12.
Why in News?
- The Labour Bureau, an attached office of the Ministry of Labour & Employment, has been compiling Consumer Price Index for Industrial Workers every month on the basis of retail prices collected from 317 markets spread over 88 industrially important centres in the country.
- The All-India CPI-IW for February, 2023 decreased by 0.1 point and stood at 132.7 (one thirty two point seven) points.