Simple ppt on inflation cpi,wpi

1. 1 January 2015 1Team-1
Inflation and its Components (WPI,CPI)
Presented by,
S.Abarna
R.Rachel

2. Inflation is an increase in the overall level of
prices.
Because rising prices reduce the buying power
of money
inflation can also be defined as a decline in the
value of money
1 January 2015 2Team-1
What is Inflation?

3. WHOLESALE INFLATION
RETAIL INFLATION
FOOD INFLATION
HOUSING INFLATION
LIFESTYLE INFLATION
EDUCATION INFLATION
MEDICAL INFLATION
1 January 2015 3Team-1
7 Types of Inflation

4. Wholesale or headline inflation is measured on the
basis of the changes in wholesale price index (WPI)
Helps the government to spot the price rise in advance.
However, wholesale inflation lost its relevance after the
government changed the frequency of reviewing the
index from a weekly to monthly basis, and the Reserve
Bank of India shifted its monetary focus from wholesale
to retail inflation.
1 January 2015 4Team-1
1.Wholesale Inflation

5. 1 January 2015 5Team-1
Graph-Wholesale Inflation

6. Retail inflation is calculated on the basis of
changes in the Consumer Price Index (CPI).
Since it measures the impact of price rise,
it is more relevant for financial planning for
the average investor
1 January 2015 6Team-1
2.Retail Inflation

7. 1 January 2015 7Team-1
Graph-Retail Inflation

8. Food inflation is a subset of headline inflation
and is expected to rise further in the coming
months due to a deficit in the monsoon rains.
Given the large number of people below the
poverty line, it is a major cause for concern for
developing countries like India.
1 January 2015 8Team-1
3.Food Inflation

9. 1 January 2015 9Team-1
Graph-Food Inflation

10. Housing inflation is another subset of headline
inflation. It is rising at a faster clip compared with
the headline inflation and was above 15% two
years ago.
The cost of housing is a major expenditure for
city dwellers and is more important for them. This
is why one must consider it while planning for the
real estate goals.
1 January 2015 10Team-1
4.Housing Inflation

11. 1 January 2015 11Team-1
Graph-Housing Inflation

12. As an individual's income increases, there is a
gradual improvement in lifestyle—bigger house,
branded clothes, better car.
These additional expenses result in what is
termed as lifestyle inflation.
1 January 2015 12Team-1
5.Lifestyle Inflation

13. Education inflation is also a subset of headline
inflation, it only measures the increase in cost of
education and stationery.
1 January 2015 13Team-1
6.Education Inflation

14. 1 January 2015 14Team-1
Graph-Education Inflation

15. Medical inflation is relatively under control in
India due to the government restrictions on drug
price rise and technological innovation to keep a
tab on medical equipment costs.
1 January 2015 15Team-1
7.Medical Inflation

16. 1 January 2015 16Team-1
Graph-Medical Inflation

17. WPI-Wholesale price index ( WPI) is designed to
measure the change of price in the primary and
wholesale markets.
CPI-The CPI measures the average change over
time in the prices paid by urban consumers for
goods and services
1 January 2015 17Team-1
How to measure inflation?

18. 1 January 2015 18Team-1
WPI and its components

19. 1 January 2015 19Team-1
CPI and its components

20. 1 January 2015 20Team-1
WPI and CPI

21. 1 January 2015 21Team-1
WPI-Importance

22. 1 January 2015 22Team-1
CPI-Importance

23. Laspeyre was a German economist .
His formula used in calculation of WPI, CPI, IIP, service price
indices.
It is a Weighted arithmetic mean.
1 January 2015 23Team-1
[Act 7] What is Laspeyre’s formula

24. 1 January 2015 24Team-1
Laspeyre’s Formula

25. http://mrunal.org/2014/08/explained-wpi-cpi-iip-index-
component-core-inflation-headline-inflation-laspeyre.html
http://articles.economictimes.indiatimes.com/2014-07-
14/news/51484981_1_headline-inflation-wholesale-price-index-
wpi
1 January 2015 25Team-1
References