Indices of Inflation

Indices of Inflation

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The majority of everyday or common-use goods and services, such as food, clothing, housing, recreation, transportation, consumer staples, and so on, have seen their prices rise due to inflation. The average change in price over time for a group of goods and services is what we call inflation. "Deflation" refers to the opposite and rare fall in this basket's Price Index. A country's currency's declining purchasing power is an indicator of inflation. Percentage is used to measure this. Demand Pull Inflation and Normal Inflation are the two types of inflation:

Demand pull inflation - The average change in price over time for a group of goods and services is what we call inflation. "Deflation" refers to the opposite and rare fall in this basket's Price Index. A country's currency's declining purchasing power is an indicator of inflation. Percentage is used to measure this. Demand Pull Inflation and Normal Inflation are the two types of inflation:

Cost pull inflation - When there is a decrease in the total supply of goods and services, the cost of production goes up. Cost Pull Inflation is brought on by a lack of production factors like labor, land, and capital, among others. as well as as a result of hoarding-induced artificial scarcity. For instance, Brent unrefined Costs crossed $65 per barrel in May 2021, beyond twofold of what it was a year prior. In April 2021, the price of vegetable oils, a major import, increased by 57% to a decade-high. International freight costs are rising, and metals prices are near their highest level in ten years.

In India, two main indices are used to measure inflation – the CPI or, the Consumer Price Index and the WPI or, the Wholesale Price Index which measure changes in prices at the wholesale and retail levels, respectively. The difference in the prices of goods and services that Indian consumers purchase for use, such as food, medical care, education, electronics, and so on, is the basis for the CPI calculation. The WPI, on the other hand, records the goods or services that large corporations sell to smaller companies for further distribution. In India, inflation is measured using both the Consumer Price Index (CPI) and the Wholesale Price Index (WPI).