- 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 has been compiling the 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 index is compiled for 88 centres and All-India and is released on the last working day of the succeeding month. The index for the month of March, 2023 is being released.
- The All-India CPI-IW for March 2023 increased by 0.6 points and stood at 133.3 (one hundred thirty three point three).
- On a 1-month percentage change, it increased by 0.45 per cent with respect to the previous month compared to an increase of 0.80 per cent recorded between corresponding months a year ago.