With reference to the Wholesale Price Index WPI and Consumer Price Index CPI consider the following ...........

Indian Economic System(RAS) Inflation

With reference to the Wholesale Price Index (WPI) and Consumer Price Index (CPI), consider the following statements:

1. Unlike the WPI basket, CPI basket includes services.

2. Fuel and Power component has the maximum weightage in the WPI while the Food and Beverages component holds the maximum weightage in the CPI.

3. WPI helps in timely intervention by the Government to check in fl ation in essential items while CPI is used as an anchor for the inflation targeting in India.

4. Unlike the WPI basket, CPI includes indirect taxes.

How many of the statements given above is/ are correct?

Only one

Only two

Only three

All four

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Explanation:

Only three

The Wholesale Price Index is the price of a representative basket of wholesale goods.
Some countries use WPI changes as a central measure of inflation.
But now India has adopted new CPI to measure inflation.
A consumer price index is a price index, the price of a weighted average market basket of consumer goods and services purchased by households.
Changes in measured CPI track changes in prices over time.
The CPI is calculated by using a representative basket of goods and services.