Measurement of Inflation Inflation is measured by calculati | UPSC Notes EPFO Labour Law

Measurement of Inflation

Inflation is measured by calculating the percentage rate of change of a price index, which is called the inflation rate.
Inflation is often measured either in terms of Wholesale Price Index or in terms of Consumer Price Index.


➨ Wholesale Price Index(WPI) : The Wholesale Price Index is an indicator designed to measure the changes in the price levels of commodities that flow into the wholesale trade intermediaries.The index is a vital guide in economic analysis and pinflation in India- economics study material and notesolicy formulation. It is a basis for price adjustments in business contracts and projects. It is also intended to serve as an additional source of information for comparisons on the international front.

➨ Consumer Price Index (CPI) : Consumer price index is specific to particular group in the population. It shows the cost of living of the group. It is based on the changes in the retail prices of goods or services. Based on their incomes, consumer spends money on these particular set of goods and services. There are different consumer price indices. Each index tracks the changes in the retail prices for different set of consumers.