Consider the following statements :
- 1.The weightage of food in Consumer Price Index (CPI) is higher than that in Wholesale Price Index (WPI).
- 2.The WPI does not capture changes in the prices of services, which CPI does.
- 3.Reserve Bank of India has now adopted WPI as its key measure of inflation and to decide on changing the key policy rates.
Which of the statements given above is/are correct ?
Show answer
Answer: A. Statement 1 is correct: food has a much higher weight in CPI (about 46% in CPI-Combined) than in WPI. Statement 2 is correct: WPI covers only goods, while CPI also covers services like health and education. Statement 3 is wrong: since 2014-16 RBI uses CPI (Combined) inflation as its main target, not WPI. So 1 and 2.
Watch for: WPI was the old headline measure, so students think RBI still uses it.
Why the other options are wrong
- B. Wrong because statement 1 is also correct.
- C. Wrong because RBI uses CPI, not WPI.
- D. Wrong because statement 3 is false.
Source to check: MoSPI CPI base 2012 weights (mospi.gov.in); Office of the Economic Adviser, DPIIT (WPI 2011-12); RBI Act, 1934, Section 45ZA (inflation target)
Answer from the official UPSC key. Written and fact-checked by AI against the official key. Spotted a mistake? Report it.