How do you calculate inflation?
Inflation is in talk for many in recent weeks, and has received a great interest from the media and politicians. At the same time, inflation is a monetary problem that the normal person meets on a daily basis in terms of top prices, particularly of food products.
How is inflation calculated?
In India, there are two broad measures of inflation - based on the consumer price index (CPI) and based on the wholesale price index (WPI). Of the two, the second has a higher summary because it is measured every week. When you read about inflation rising to 12%, it is probably referring to inflation based on WPI.
WPI is based on the wholesale prices of 435 items ranging from agricultural commodities like wheat, rice etc to manufactured products like steel, cement etc. A single index number is calculated based on those prices, and the inflation rate is calculated by comparing the most recent index number with that of a last year.
Last weeks figure is 0.44. That's very low so RBI rate cut is expected. Also experts believe that we will see deflation soon. That is negative inflation!
Inflation Calculation (WPI)
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Monday, March 23, 2009
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Labels:
Commodity,
CPI,
Deflation,
Economy,
Index,
Inflation,
Interest Rate,
Media,
Politics,
Price Movement,
RBI,
WPI
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2 comments:
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