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.