Consider the following statements:
- The weightage of food in Consumer Price Index (CPI) is higher than that in Wholesale Price Index (WPI).
- The WPI does not capture changes in the prices of services, which CPI does.
- Reserve Bank of India has now adopted WPI as its key measure of inflation and to decide on changing the key policy rates.
Which of the statements given above is/are correct ?
1 and 2 only
2 only
3 only
1, 2 and 3
Answer is Wrong!
Answer is Right!
This question was previously asked in
UPSC IAS – 2020
– Statement 2: WPI primarily measures price changes of goods traded in wholesale markets. CPI measures price changes of a basket of goods and services consumed by households. Therefore, WPI does not capture changes in the prices of services, while CPI does.
– Statement 3: The Reserve Bank of India (RBI) officially adopted the Consumer Price Index (Combined) (CPI-C) as its key measure for inflation targeting and monetary policy decisions following the recommendations of the Urjit Patel Committee in 2014. Prior to this, WPI was more commonly used, but now CPI is the primary target variable for inflation.