About the CPI:

The Labour Bureau, an office of the Ministry of Labour & Employment, releases the Consumer Price Index for Industrial Workers (CPI-IW) monthly. The CPI-IW for July 2024 has increased by 1.3 points to 142.7.

About the CPI:

The Consumer Price Index (CPI) is a measure used to evaluate changes in the price level of a basket of consumer goods and services purchased by households. It’s a key indicator of inflation and cost of living. Here’s an overview of the CPI and its significance:

Key Aspects of CPI

1. Purpose:
   • The CPI measures how much the cost of living changes over time by tracking the prices of a fixed basket of goods and services. It reflects the average price level changes experienced by consumers.
2. Types of CPI:
   • CPI for All Urban Consumers (CPI-U): Measures price changes for all urban consumers, representing a wide range of households.
   • CPI for Urban Wage Earners and Clerical Workers (CPI-W): Focuses on a subset of urban consumers, specifically wage earners and clerical workers.
   • CPI for Industrial Workers (CPI-IW): Used in India to gauge price changes experienced by industrial workers.
3. Components of CPI Basket:
   • The basket typically includes categories like food and beverages, housing, apparel, transportation, medical care, recreation, education, and communication.
4. Calculation:
   • The CPI is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. The basket’s prices are compared to a base year to calculate the index.
5. Base Year:
   • The CPI is usually expressed in terms of a base year. For example, if the base year is 2016=100, a CPI of 120 in a later year indicates a 20% increase in the price level since the base year.
6. Usage:
   • Inflation Measurement: CPI is a primary measure of inflation, indicating how the purchasing power of money changes over time.
   • Cost of Living Adjustments: It’s used to adjust salaries, pensions, and social security benefits to keep pace with inflation.
   • Economic Policy: Governments and central banks use CPI data to make decisions on monetary policy and economic planning.

CPI in India

In India, the CPI is calculated and published by the Ministry of Statistics and Programme Implementation (MoSPI). There are several indices based on different groups:

• CPI for Industrial Workers (CPI-IW): Reflects price changes affecting industrial workers.
• CPI for Agricultural Labourers (CPI-AL) and CPI for Rural Labourers (CPI-RL): Reflect price changes affecting agricultural and rural laborers.
• CPI (Rural), CPI (Urban), and CPI (Combined): General indices reflecting price changes for rural and urban consumers, and a combined measure for both.