ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Consumer Price IndexSubscribe to Consumer Price Index

A Statistical Quirk

With core inflation still sticky, any significant dip in consumer prices is very unlikely.

Understanding Inflation Dynamics in India

The flexible inflation targeting framework was formally adopted by India in 2016 with an amendment to the Reserve Bank of India Act. This paper attempts to throw light on the dynamics of consumer price index headline, core, and food inflation, using a relatively young and atheoretical approach pioneered by Stock and Watson in 2007. The empirical results, indicating that the behaviour of core inflation is different from that of headline and food inflation, have implications for the conduct of monetary policy.

Boosting Growth: Leaving Much To Be Desired

Economic planning requires well preparedness to meet the challenge of a better growth rate.

In Search of Optimal Inflation

The impact of inflation on dispersion of relative prices is examined in a cointegration framework using a data set of all seven components of the consumer price index from India. The empirical evidence indicates that the dispersion of relative price increases with an increase in deviation of inflation from a certain threshold rate in either direction but not with inflation per se, as is traditionally believed. The crucial inference that emerges from the empirical findings is the presence of a threshold inflation rate corresponding to which the dispersion of relative prices is minimised, and this threshold turns out to be 5%.

Micro-level Price Setting Behaviour in India

In the contemporary literature of macroeconomics, the mainstream frameworks for policy evaluation have recognised the significance of price rigidities, emerging from the micro-level pricing behaviour of firms, to explain the short- and medium-run effects of monetary policy interventions. The stickiness in price adjustment is evaluated in the context of the Indian economy by using the Consumer Price Index for Industrial Workers data. The findings suggest that the monthly frequency of price changes is greater for the food group compared to the non-food group, and evidences are also found of exogenous versus menu cost-driven pricing behaviour in India.

Indexation Policy of the 7th Central Pay Commission Report

There is a need to revise the manner in which the pay commissions have indexed inflation and the concomitant pay rise. This critique looks at the weaknesses of the existing methodology and proposes some revisions to make it more representative and robust.

Inflation with Disinflation?

Price inflation in India as measured by the Wholesale Price Index and the Consumer Price Index has shown diverging trends. While WPI indicates a disinfl ationary situation for 16 months, CPI indicates inflation. Explaining the construction of the two indices, the trends of subgroups of both indices are presented. It is found that the different sample sizes and weightages of commodity groups of both indices and price interventions in the market explains, at least in part, this odd situation of infl ation along with disinfl ation.

Formula Does Matter

Amid the chaos around the new gross domestic product figures put out by the Central Statistics Office, profound improvements made in another prominent statistical marker--the Consumer Price Index--also compiled by the CSO, went unnoticed. The CPI series was revised to a more recent base year, 2012. This alone probably deserves commendation as base years of other national price indices have grown significantly remote. It is indeed a tectonic shift in estimation procedure and conforms to international best practice concerning CPI. Here we discuss the decision of CSO to replace the arithmetic mean with the geometric mean in the updated CPI indices by going through each of the established approaches to index number theory used to identify the appropriate formulation to calculate basic indices.
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