Concept of Consumer Price Index (CPI)

Why in news

  • Growth in the Consumer Price Index quickened in September from 3.28% in the previous month.

Consumer Price Index (CPI)

  • It is also called as retail inflation because prices are quoted from retailers.
  • CPI captures variations in prices levels at the consumer level.
  • It is based on 260 commodities, and also includes certain services.
  • Ministry of Statistics and Programme Implementation (MoSPI) and Ministry of Labour and Employment (MOLE) are engaged in the construction of different CPI for different groups/sectors.
  • Following are the various CPIs
  • CPI for Industrial Workers (IW).
  • CPI for Agricultural Labourer (AL).
  • CPI for Rural Labourer (RL).
  • CPI (Rural/Urban/Combined).
  • The first three are compiled by the Labour Bureau in the Ministry of Labour and Employment.
  • Fourth is compiled by the Central Statistical Organisation (CSO) in the Ministry of Statistics and Programme Implementation.
  • Base Year for CPI is 2012.

Consumer Food Price Index (CFPI)

  • It is a measure of change in retail prices of food items consumed by the population.
  • It was launched by CSO in 2014.
  • The index gives food price level changes for rural, urban and all India bases.
  • The base year used in CFPI is 2012 as in the case of CPI.
  • CFPI is based on retail price quotations as in the case of CPI.

Composition of CFPI

  • The Methodology for the calculation of CFPI is similar to that of CPI.
  • In CPI, food and beverage group constitutes 45.86% of weight. Out of this, beverages and some of the eatable items are excluded to derive the CFPI basket of commodities.
  • Weight of the CFPI commodities is 39.05% of the entire CPI basket. 
  • CSO brings CFPIs for the three groups and hence there are three CFPIs:
  • CFPI -Rural
  • CFPI –Urban
  • CFPI – Combined
  • Price quotations and data are collected from selected towns by the Field Operations Division of NSSO and from selected villages by the Department of Posts.
  • Data are received through web portals being maintained by the National Informatics Centre.

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