India CPI Inflation Rate May 2021

• India’s retail inflation surged to 6.30 percent in May, over and above the Reserve Bank of India’s (RBI) threshold of 6 percent.
• The retail inflation has breached the inflation target of 4+/-2 per cent set by the Reserve Bank of India’s (RBI).
• The CPI data is mainly factored in by the RBI while making its bi-monthly monetary policy.

• The RBI has projected the CPI inflation at 5.1 per cent during the financial year 2021-22.
• Consumer Price Index (CPI), for the month of April, was revised to 4.23 per cent from 4.29 per cent.
• Consumer Food Price Index (CFPI) or the inflation in the food basket also spiked on-month during May to 5.01 per cent, from 1.96 per cent in April
• WPI inflation rate was -3.37 per cent in May 2020 and 10.49 per cent in April 2021.

CPI:

• It measures price changes from the perspective of a retail buyer.
• It measures changes over time in the level of retail prices of selected goods and services on which consumers of a defined group spend their incomes.

• Base Year -- 2012 (100)
• CPI is based on 260 commodities, also includes certain services.
• It is used to calculate the Dearness Allowance (DA) for government employees.
• Four types of CPI --- CPI for Industrial Workers (IW), CPI for Agricultural Labourer (AL), CPI for Rural Labourer (RL), and 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 National Statistical Organisation (NSO)

WPI:

• It is used to calculated wholesale inflation.
• It is published by the Office of Economic Adviser, Ministry of Commerce and Industry.
• It is often known as headline inflation
• WPI shows the combined price of a commodity basket comprising 676 items.
• WPI does not include services,
• Major criticism for this index is that the general public does not buy products at wholesale price.
• The base year of WPI --- 2011-12.