General Awareness

April 04, 2017 @ 01:15 PM

April 04, 2017 @ 01:15 PM

K. J. Somaiya Institute of Management Studies and Research, Mumbai

9 Easy Steps to register for SIMSR (Infographic)

Download Now

General Awareness Topic : Retail Inflation in India

Published : Wednesday, 24 September, 2014 11:26 AM  
MBA aspirants must be updated with General Awareness on current topics. General awareness topics with analytically drawn conclusions will benefit you in Essay writing / GD & PI. Today, you will read General Awareness Topic: 
Retail Inflation in India
Inflation rate in India is measured by wholesale price index which came down to 3.74 percent in August 2014 which is its lowest value in almost five years. Though the latest data brought some cheers to the newly elected government but not to the general public as public is more affected by consumer price inflation also known as retail inflation which is based on consumer price index (CPI). 
The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation releases Consumer Price Indices (CPI) with base year 2010 for rural, urban and combined every month with effect from January, 2011.
Consumer Price Indices (CPI) measure changes over time in general level of prices of goods and services that households acquire for the purpose of consumption. CPI numbers are widely used as a macroeconomic indicator of inflation, as a tool by governments and central banks for inflation targeting and for monitoring price stability, and as deflators in the national accounts. CPI is also used for indexing dearness allowance to employees for increase in prices. CPI is therefore considered as one of the most important economic indicators.
Average retail inflation in India in 2014 till the month of July 2014 was reported to be 6.93 percent. According to the Wholesale Price Index, inflation picked up in the month of August to 6.1 per cent from 5.8 per cent in July. 
On the other hand, the (newer) Consumer Price Index indicates that inflation slowed in the same month, moderating from 9.6 per cent to 9.5 per cent. To some extent, the divergence between WPI and CPI can be attributed to statistical differences stemming from coverage, classification of items and the relative weights of their constituents. 
However, there could be other reasons for this as well. For example, higher transaction costs, taxes, etc. are reflected in the CPI but not in the WPI. Apart from these reasons, food price inflation accounts for much of the gap between the two indices.
The CPI measures inflation as experienced by consumers in their day-to-day living expenses. Though the official inflation rate in India is measured on the basis of wholesale price index (WPI), but many analysts have argued that inflation rate must be measured by CPI as it is based on the price paid by ultimate consumer. For the same reason, it is believed that CPI is more suitable for capturing the market dynamics and forecasting realistic rate of inflation. Theoretically also, CPI is a better indicator of demand side pressures than the WPI.
Despite being a realistic measure of inflation, officials rely on WPI over CPI most importantly because we do not have a single CPI that is representative of the whole country and currently there are three CPIs representing different segments of the population. On the other hand, WPI is computed on an all-India basis, while CPIs are constructed for specific centers and then aggregated to an all-India index. Secondly, WPI is available with a shorter lag than the CPIs. 
Third, WPI has a broader coverage than the CPIs in terms of the number of commodities, quotations, inclusion of non -agricultural products and tradable items. Another reason is that retail prices take longer to reflect trends that are normally captured earlier in WPI.
The upshot of the entire argument is that both retail and wholesale inflation have their own pros and cons. Though retail inflation reflects the impact on public better than wholesale inflation, price trends are reflected by WPI earlier than CPI. Therefore, by relying on WPI, government can check prices even before they reach the retail market and thus affect the ultimate consumer.
Stay informed, Stay ahead and stay inspired with MBA Rendezvous

Crucial Dates, You Should not Miss

TAPMI, Manipal
Admission Application closes on January 16, 2018 for 2018-20
BIMTECH, Greater Noida
Admissions open for PGDM Programmes at BIMTECH. Apply Now !
Lal Bahadur Shastri Institute of Management
Admissions are Open at LBSIM, Delhi. Apply Now !
FORE School of Management
Apply for PGDM & PGDM-IB Programmes. Application Deadline is December 22, 2017.
Goa Institute of Management
PGDM Admissions Open at GIM. Apply Before January 5, 2018
Last Date to Apply for MBA (Full Time) Programme at NIRMA is January 09, 2018
XAT 2018
Application Last Date 15th December 2017 ( With Late Fee )
IMI New Delhi
Application closes 4th December 2017
XIM Bhubaneshwar
Last Date 8th December 2017
SIBM Bengaluru
Apply for SNAP 2017 to be held on Dec 17 and apply for SIBM-Bengaluru through the SNAP Form
Institute of Rural Management Anand
IRMASAT will be conducted on February 4,2018, Apply Before December 31,2017
IBSAT 2017
Last date for IBSAT registration is December 12 , 2017
SIBM Hyderabad
Apply for SNAP 2017 to be held on Dec 17 and apply for SIBM-Hyderabad through the SNAP Form
Institute of Public Enterprise
Last Date to Apply for IPE, Hyderabad is 31st December 2017
K J Somaiya Institute of Management Studies & Research, Mumbai
Last date for Application is 31st Jan, 2018
Application for PGDM 2018-20 at SDMIMD is open till February 28, 2018
MDI Murshidabad
Applications for PGPM 2018-20 at MDI Murshidabad are open

Admission Open Now

Following Colleges are accepting applications.


Admissions open for 2018-20

PGDM, PGDM (HRM), PGDM(B & FS), Executive PGDM

Apply Online