How to calculate inflation rate in india

According to the World Bank consumer price index for India, today's prices in are 7, This means that a rupee today only buys 1. The Indian Rupee experienced an average inflation rate of 7. This inflation data is collected by the World Bank and is specific to India. The inflation rate was 1. The current inflation rate to is now 7.

What is Consumer Price Index (CPI) Inflation?

Inflation is defined as a situation where there is sustained, unchecked increase in the general price level and a fall in the purchasing power of money.

Thus, inflation is a condition of price rise. The reason for price rise can be classified under two main heads : 1 Increase in demand 2 Reduced supply.

Suppose for Rs. This means that the cost of 1Kg of rice was Rs. He also explained that the price of rice has increased, and now it is Rs. This example clearly explains the fall in the purchasing power of money. For Rs. So purchasing power of money got reduced. This is inflation. If price of rice, which was Rs. Is inflation that bad? High rates of inflation is bad because, it can eat up hard-earned money of ordinary people. Life of common man will become tough. His savings will soon be exhausted, unless his investments offer high rate of return than the inflation rate present in the country.

Unchecked inflation can ruin the whole economy. There are many examples from African and South American economies which got shattered by the high inflation rates. But who measures inflation rate in India? And what are they types of Inflation indices in India? Inflation can be measured at three levels — producer, wholesaler and retailer consumer. Prices generally rise in each level till the commodity finally reach the hand of consumer. As of now in India, there is no index to measure inflation at producer level.

This is the most popular inflation rate calculation methodology in India. This inflation rate is often known as headline inflation. WPI shows the combined price of a commodity basket comprising items. But WPI does not include services, and it neither reflect the bottlenecks between producer and wholesaler nor between wholesaler and retailer consumer.

Consumer often directly buys from retailer. So the inflation experienced at retail shops is the actual reflection of the price rise in the country. It also shows the cost of living better. CPI is based on commodities, but includes certain services too. There were four Consumer Price Indices covering different socio-economic groups in the economy. They are Headline Inflation and Core Inflation. Headline Inflation is the measure of total inflation within an economy.

It includes price rise in food, fuel and all other commodities. Core inflation is also a term used to denote the extend of inflation in an economy. But Core inflation does not consider the inflation in food and fuel. This is a concept derived from headline inflation.

There can be two set of factors that can cause inflation in an economy. They are Demand Pull and Cost Push. Both government and central bank Reserve Bank try to tackle inflation with their policies which are known as Fiscal and Monetary Policies respectively.

Fiscal policies correspond to tax related measures taken by government to control inflation money supply. Administrative measures taken by government like strengthening of Public Distribution System also plays a crucial role in curbing inflation. As we hinted in the beginning, inflation can occur because of high demand too. This is called demand pull inflation. But demand for a commodity is a good sign from the industry perspective.

Industries now will try to produce more commodities to reap the benefit of high prices and demand. More production will trigger GDP growth. Alex is the founder of ClearIAS website and app. He is also the author of the best-seller book 'Important Judgments that transformed India'. Really liked the way all the things are so well orderly and mannerlly thought here with best example and relating it to indian economy helps to understand batter the economy of india… hearty thanks to u sir…i would like read such important topics here also….

Also, CFPI i. Please verify the facts at your level and change accordingly. Thanks Clearias Your notes are really very good and helpful. But sir your notes are not in sequence , It is scattered. If you can serialize the notes then it will be more useful and sir please update the notes along with time. Thank you for the feedback. We will be updating the notes which need revision soon. Sir, I am studying now 12th std commerce with business maths group.

I need to become a IAS officer but what should I wanted to prepare I have no idea about it please guide me sir. Very nice notes. If you provide so , we would get benefitted much more.

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Will You Believe? Comments great site…….. Dear Sir I really liked economics notes mentioned on site,Will it be enough for economics? Excellently Expalined.. Thank You For the Post. Really nice… thanks.. Aspirants friendly explanation. I want economics notes in Tamil i Pdf. If anyone having the link of pdf.

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Calculate the time value of money based on historical data from India, using inflation rates and CPI. To start, select an amount and two years/months. The statistic shows the inflation rate in India from to , with projections up until The inflation rate is calculated using the price.

An index used by the Reserve Bank of India till to make its monetary policy, WPI, as the name suggests, measures the prices at the wholesale level. WPI is the price of a representative basket of wholesale goods. It takes a basket of items into account and shows the combined prices. The basket used in WPI is composed of three groups: Manufactured Products 65 percent of total weight , Primary Articles like food, etc. CPI, based on commodities including certain services, measures the change in prices at the retail level.

Inflation rate in India was 5.

If you don't know it, you can find it here: Consumer Price Index Present. But let's calculate the price difference between and By looking at the above example, common sense would tell us that the index increased it went from to

India Inflation Calculators

Consumer Price Index or CPI as it is commonly called is an index measuring retail inflation in the economy by collecting the change in prices of most common goods and services used by consumers. Called market basket, CPI is calculated for a fixed list of items including food, housing, apparel, transportation, electronics, medical care, education, etc. Note that the price data is collected periodically, and thus, the CPI is used to calculate the inflation levels in an economy. This can be further used to compute the cost of living. This also provides insights as to how much a consumer can spend to be on par with the price change. The Reserve Bank of India and other statistical agencies study CPI so as to understand the price change of various commodities and keep a tab on inflation.

Retail inflation breaches RBI target in October, now at a 16-month high of 4.62%

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Inflation is defined as a situation where there is sustained, unchecked increase in the general price level and a fall in the purchasing power of money. Thus, inflation is a condition of price rise.

Consumer prices dropped 0. Lower prices for food and beverages drove this third consecutive monthly decrease.

Inflation rate in India 2021

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India Inflation Calculator

This tool is useful to calculate the time value of money based on historical inflation and CPI values. To start, select an amount and two years, or browse the default calculation results. The inflation rate in India between and was 8, This means that rupees in are equivalent to 8, The average annual inflation rate between these periods was 7.