How can cpi 3.41 and Wpi 3.54 be interpreted? I know that cpi gives the inflation rate but what is it that we understand from these figures?

  • $\begingroup$ You mean besides the inflation rate? Are you asking what "inflation rate" means? Or are you asking how CPI and WPI are calculated? $\endgroup$ – Giskard Apr 5 '18 at 8:01
  • $\begingroup$ I meant what is it that we derive from the numbers. For instance a correlation of 0.9 indicates a strong relationship between variables. $\endgroup$ – Harry Apr 5 '18 at 8:03
  • $\begingroup$ You said yourself that "CPI gives the inflation rate". That is what we derive from the number. Does this answer your question? If not, could you clarify what your exact question is? $\endgroup$ – Giskard Apr 5 '18 at 10:19
  • $\begingroup$ By 3.54 do we infer that the price has risen or fallen compared to the previous period? $\endgroup$ – Harry Apr 5 '18 at 10:46

In itself, a price index for single period does not tell you much, as any index is, by definition, without dimension. Assuming that 3.41 is the annual change in the CPI (= Consumer Price Index), this would imply an inflation rate of 3.41%. To be specific, it implies that the total price of a representative commodity basket changed by 3.41%. The WPI (= Wholesale Price Index) covers different commodities and hence yields a different inflation rate. Which one to prefer depends on what you are interested in. Consumer Prices are more relevant to private households, but businesses care about wholesale prices.

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