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Consumer Price Index UPSC NOTE

 Why in News

  • Inflation is impacting personal consumption and hurting growth.

  • The latest retail inflation data, yet again, underscores how volatile food prices continue to hold hostage.

  • Also depictes broader inflation but also the lynchpin of economic growth, namely, personal consumption. 

  • While February’s headline Consumer Price Index based reading remained virtually unchanged from the preceding month, at 5.09%.

  • The pace of food price gains computed from the Consumer Food Price Index accelerated by 36 basis points to 8.66%.

Consumer Price Index

  • The Consumer Price Index is a key metric used to measure inflation

  • It tracks the average change in prices that consumers pay for a representative basket of goods and services over time.

Here are the basic details about CPI:

  • What it measures: The CPI measures the average change in prices that consumers pay for a basket of goods and services. 

  • This basket includes items like food, housing, transportation, clothing, medical care, recreation, and education.

  • How it's calculated: The CPI is calculated by the Bureau of Labor Statistics (BLS) in the United States. 

  • The BLS tracks the prices of a fixed basket of goods and services every month

  • They then compare the current prices to the prices in a base period (which is currently 2018).

  • The CPI is expressed as a percentage change from the base period.

  • How it's used: The CPI is used by policymakers, businesses, and consumers to track inflation. 

  • It is also used to adjust wages, pensions, and other social security benefits for inflation.

  • An increase in the CPI indicates inflation, which means that the purchasing power of money is going down

  • A decrease in the CPI indicates deflation, which means that the purchasing power of money is going up.



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Learnerz IAS | Concept oriented UPSC Classes in Malayalam: Consumer Price Index UPSC NOTE
Consumer Price Index UPSC NOTE
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
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