Measures of inflation
Reserve
Bank governor D Subbarao has said that India needs a new measure of
inflation — the producer price index. According to Subbarao, the most
widely watched measure of inflation in India, the wholesale price index
(WPI), does not include services, which forms a big part of economic activity.
Let’s have a look at all the current inflation measures and their shortcomings
and what the RBI wants:
Wholesale Price Index
The WPI is the most widely watched gauge of prices in India, tracking
commodity prices at the wholesale level. It has three major components: primary
goods, fuel and power index and manufactured goods.
