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Consider the following statements regarding Wholesale Price Index (WPI) and the Consumer Price Index (CPI) inflation.
- The weight of food in CPI is far higher than in WPI.
- Both capture price changes of services.
- Both are released by the Central Statistical Organisation (CSO).
Which of the above statements is/are correct?
- a)1, 2
- b)1, 3
- c)1 only
- d)1, 2, 3
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
Consider the following statements regarding Wholesale Price Index (WPI...
Understanding WPI and CPI
The Wholesale Price Index (WPI) and Consumer Price Index (CPI) are crucial indicators for measuring inflation in an economy, but they have distinct characteristics.
Statement 1: Weight of Food in CPI vs. WPI
- The weight of food in the CPI is indeed higher compared to the WPI.
- CPI accounts for the prices that consumers pay for a basket of goods and services, where food constitutes a significant portion.
- WPI, on the other hand, focuses on the prices of goods at the wholesale level and has a lower weight for food compared to CPI.
Statement 2: Capture of Price Changes of Services
- This statement is incorrect.
- CPI captures price changes of services as it includes consumer services like healthcare and education in its calculation.
- WPI primarily focuses on the prices of goods and does not account for services.
Statement 3: Release by the Central Statistical Organisation (CSO)
- This statement is also incorrect.
- While CPI is released by the CSO, WPI is published by the Office of the Economic Adviser, Ministry of Commerce and Industry.
- Therefore, both indices do not originate from the same organization.
Conclusion
Based on the analysis of the statements:
- Only Statement 1 is correct.
- Thus, the correct answer is option "C" - "1 only".
Understanding these differences is essential for comprehending how inflation is measured and reported in the economy.
The Wholesale Price Index (WPI) and Consumer Price Index (CPI) are crucial indicators for measuring inflation in an economy, but they have distinct characteristics.
Statement 1: Weight of Food in CPI vs. WPI
- The weight of food in the CPI is indeed higher compared to the WPI.
- CPI accounts for the prices that consumers pay for a basket of goods and services, where food constitutes a significant portion.
- WPI, on the other hand, focuses on the prices of goods at the wholesale level and has a lower weight for food compared to CPI.
Statement 2: Capture of Price Changes of Services
- This statement is incorrect.
- CPI captures price changes of services as it includes consumer services like healthcare and education in its calculation.
- WPI primarily focuses on the prices of goods and does not account for services.
Statement 3: Release by the Central Statistical Organisation (CSO)
- This statement is also incorrect.
- While CPI is released by the CSO, WPI is published by the Office of the Economic Adviser, Ministry of Commerce and Industry.
- Therefore, both indices do not originate from the same organization.
Conclusion
Based on the analysis of the statements:
- Only Statement 1 is correct.
- Thus, the correct answer is option "C" - "1 only".
Understanding these differences is essential for comprehending how inflation is measured and reported in the economy.
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Community Answer
Consider the following statements regarding Wholesale Price Index (WPI...
- The WPI and the CPI baskets are different, both at the weightage assigned to food, fuel and manufactured items as well as at the broken-down level of these segments. The weight of food in CPI is higher than in WPI.
- The WPI inflation does not capture price changes of services but the CPI does.
- WPI inflation is released by the Office of Economic Adviser, Department for Promotion of Industry and Internal Trade (DPIIT).
- CPI for Industrial workers CPI(IW), CPI for Rural Labourers (RL) and CPI for Agricultural Labourers CPI(AL) are compiled by the Labour Bureau.
- CPI(Urban), CPI(Rural) and CPI Combined are compiled by the Central Statistical Organisation (CSO).
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Consider the following statements regarding Wholesale Price Index (WPI) and the Consumer Price Index (CPI) inflation. The weight of food in CPI is far higher than in WPI. Both capture price changes of services. Both are released by the Central Statistical Organisation (CSO).Which of the above statements is/are correct?a)1, 2b)1, 3c)1 onlyd)1, 2, 3Correct answer is option 'C'. Can you explain this answer?
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