economics medium MCQ

Which of the following statements correctly differentiates the Wholesale Price Index (WPI) from the Consumer Price Index (CPI) in India?

  1. WPI includes services like housing and education, while CPI only tracks physical goods
  2. CPI includes services and tracks retail inflation affecting consumers, while WPI tracks only physical goods at the wholesale level
  3. WPI is published by the NSO, while CPI is published by the Office of the Economic Adviser
  4. WPI is used as the anchor for the RBI's inflation-targeting monetary policy framework

Answer: CPI includes services and tracks retail inflation affecting consumers, while WPI tracks only physical goods at the wholesale level

The most critical structural difference is that the WPI completely ignores the services sector, which constitutes over 50% of India's GDP. The CPI captures retail price changes for both goods and services (like healthcare, education, and housing). Furthermore, since 2014, the RBI uses CPI (Combined), not WPI, as the official anchor for its inflation-targeting mandate.

Topic Indian Economy - Data
Exam Relevance UPSC Prelims, SSC CGL, Banking
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