0
$\begingroup$

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?

$\endgroup$
4
  • $\begingroup$ 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, 2018 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, 2018 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, 2018 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, 2018 at 10:46

1 Answer 1

1
$\begingroup$

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.

$\endgroup$

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service and acknowledge that you have read and understand our privacy policy and code of conduct.

Not the answer you're looking for? Browse other questions tagged or ask your own question.