Context

According to the latest data released by the Ministry of Statistics & Programme Implementation (MoSPI), India’s retail inflation grew 6.09 percent in June.

About

• India’s retail inflation is measured by the Consumer Price Index (CPI). It grew at 6.09% in June.
• The government had not released the headline retail inflation data in April and May.
  • However, in April, it had revised the CPI data for March to 5.84 percent from 5.91 percent.
• The retail inflation has grown beyond the Reserve Bank of India’s (RBI) upper margin of 6 percent.
  • The government has mandated the Indian central bank to keep inflation within the range of 4 percent with a margin of 2 percent on either side.
• The Consumer Food Price Index (CFPI) or the inflation in the food basket eased to 7.87 percent in June as the supply related issues because of the nationwide lockdown eased.
  • The CFPI for May was revised to 9.20 percent.
• The retail inflation growth was due to:
  • A rise in pulses and productsprices that saw a 68 percent on-year rise in June.
  • The meat and fishsegment saw a rise of 22 percent.
  • Oils and fatsrose 27 percent and spices prices gained 11.74 percent.

Inflation

• It is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling.
• Inflation is classified into three types: Demand-Pull inflation, Cost-Push inflation, and Built-In inflation.
• The most commonly used inflation indexes are the Consumer Price Index (CPI) and the Wholesale Price Index (WPI).
• In India, the NSO under the Ministry of Statistics and Programme Implementation (MOSPI) measures inflation.
  

  Consumer Price Index (CPI) It is an index measuring retail inflation in the economy by collecting the change in prices of most common goods and services used by consumers. The CPI is used to calculate the inflation levels in an economy. In India, there are four consumer price index numbers, which are calculated, and these are as follows: CPI for Industrial Workers (IW) CPI for Agricultural Labourers (AL) CPI for Rural Labourers (RL) and CPI for Urban Non-Manual Employees (UNME). While the Ministry of Statistics and Program Implementation collects CPI (UNME) data and compiles it, the remaining three are collected by the Labour Bureau in the Ministry of Labour. CPI = (Cost of basket divided by Cost of basket in the base year) multiplied by 100. The base year for CPI is 2012.