0
$\begingroup$

I am getting conflicting reports about this.

India's first-ever CPI-based inflation rate at 7.65% in January 2012

India’s first ever annual inflation rate, based on the consumer price index (CPI), was 7.65 per cent for the month of January 2012, government data relased on Tuesday showed.

This seems to say that they started measuring CPI inflation only in Jan 2012

However, I also found this from 2009,

International Monetary and Financial Committee: Statement by India's Finance Minister

annual average CPI inflation is likely to remain at around 6.5 percent in 2009-10.

Macrotrends also gives CPI inflation for India from the 1960s - https://www.macrotrends.net/countries/IND/india/inflation-rate-cpi

If India didn't measure CPI before 2012, how does Macrotrend have data from 1960

Another confusing data point is here from 2010

Inflation in India highest amongst major developing nations

In June, 2010, India's inflation based on the Consumer Price Index for Industrial Workers (CPI-IW) stood at 13.7 per cent, much higher than that of Indonesia, Brazil, China and Russia.

This however says CPI-IW instead of just CPI which adds another confusion - is CPI-IW different from CPI & how different?

So when did India actually start measuring CPI inflation?

$\endgroup$

1 Answer 1

1
$\begingroup$

India has been measuring inflation since the 1960s, but it wasn't until 2012 that the government started publishing data on CPI inflation. Before 2012, the government only published data on WPI inflation.

WPI inflation is a measure of inflation for the wholesale market, which is where businesses buy goods and services from each other. CPI inflation is a measure of inflation for the consumer market, which is where households buy goods and services for their own use.

The government decided to switch from WPI to CPI inflation because CPI inflation is a better measure of inflation for the average household. WPI inflation can be volatile, and it can be affected by factors that don't directly affect households, such as changes in the price of oil. CPI inflation is more stable, and it's a better measure of the cost of living for households.

CPI-IW is a different type of CPI that measures inflation for industrial workers. It's calculated using a different basket of goods and services than the regular CPI, and it's weighted differently. CPI-IW is used by the government to set minimum wages for industrial workers.

  • WPI Inflation -- > Inflation for the wholesale market -- > 1960s
  • CPI Inflation --> Inflation for the consumer market --> 2012
  • CPI-IW Inflation --> Inflation for industrial workers --> 1970s

The inflation data on Macrotrends is for CPI inflation, not WPI inflation. The data is sourced from the Reserve Bank of India (RBI), which publishes data on CPI inflation on a monthly basis.

RBI uses the CPI to set monetary policy, and the government uses the CPI to index government benefits, such as pensions and welfare payments.

RBI did not publish CPI data before 2012 . CPI data on Macrotrends is for CPI-IW, not CPI. CPI-IW data on Macrotrends is the Labor Bureau, Government of India. It does not explicitly state but that is the case in fact. Data on Macrotrends is weighted differently than the CPI. The CPI is weighted using a Laspeyres formula, while the CPI-IW is weighted using a Paasche formula.

$\endgroup$
17
  • $\begingroup$ Yes, I understand this - my question is what is the inflation which is mentioned in macrotrends.net/countries/IND/india/inflation-rate-cpi - the page says "Inflation as measured by the consumer price index reflects the annual percentage change in the cost to the average consumer of acquiring a basket of goods and services that may be fixed or changed at specified intervals, such as yearly" - so it's not WPI? Where did they get it from? They haven't specifically said it's CPI-IW? $\endgroup$
    – user93353
    Commented Jun 18, 2023 at 1:42
  • $\begingroup$ got it. Updated the answer see the addendum $\endgroup$ Commented Jun 18, 2023 at 2:22
  • $\begingroup$ Did RBI publish CPI data before 2012? The NDTV article says that India published CPI for the first time in 2012. So how does Macrotrends have data from 1960? Is it CPI-IW - is there any source for this? $\endgroup$
    – user93353
    Commented Jun 18, 2023 at 2:41
  • $\begingroup$ CPI data on Macrotrends is for CPI-IW, not CPI see more in update # 2 $\endgroup$ Commented Jun 18, 2023 at 5:18
  • $\begingroup$ Thank you very much - is there any source that Macrotrends uses CPI-IW & not CPI? $\endgroup$
    – user93353
    Commented Jun 18, 2023 at 5:22

Your Answer

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

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