Inflation – A handy guide
The basics of Inflation Inflation is the rate of increase or decrease in prices over a specific period of time. It indicates how much more expensive or cheaper a particular set of goods and services has become over a certain period, like a quarter or a year. In India, inflation is calculated on wholesale goods as well as the consumer basket of goods. Inflation is calculated on the former by tracking changes in the Wholesale Price Index (WPI). This index measures the change in price of goods that are traded in bulk, usually between businesses. For example, change in price of coal, electricity, manufacturing of textiles, motor vehicles etc are all considered while calculating the WPI . Consumer Price Inflation For the common man, it is the Consumer Price Index (CPI) which is the more relevant tracker of inflation. The CPI measures the change in price of goods and services that is commonly consumed by households . The CPI basket of goods and...