8. Measures of Inflation

Changes in the price of goods and services in the economy are calculated by using various price indices in India such as the WPI, CPI etc. One feature common to all the price indices is the use of “base year”, which is a particular year used as a reference to calculate the price rise in a particular year. For example, the base year for All-India Wholesale Price index (WPI) has been revised from 2004-05 to 2011-12 recently.

8.1. Inflation measurement based on period 8.2. GDP Deflator 8.3. Wholesale Price Index (WPI)Key Highlights New Features Need of New Series and Analysis Limitations of WPI Importance of WPI 8.4. Consumer Price Index (CPI)Recent changes in CPI Salient features of new CPI index (revised in 2015)8.5. Services Price Index (SPI)8.6. Likely effect of GST on inflation rates Likely effect of GST on inflation ♤ Effect on WPI