Question

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) the 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?

(a) 1 and 2 only
(b) 2 only
(c) 3 only
(d) 1, 2 and 3

Answer 1

The weightage of food is higher in CPI than in WPI, WPI does not capture service price changes unlike CPI, and RBI uses CPI not WPI as the key measure of inflation, making option (a) 1 and 2 only, the correct answer.

Step-by-step explanation:

The correct statements about the weightage of food in consumer price index (CPI) and wholesale price index (WPI), whether WPI captures changes in the prices of services, and the measure of inflation used by the Reserve Bank of India (RBI) are:

1. The weightage of food in the CPI is indeed higher than that in WPI.
2. The WPI does not capture changes in the prices of services, which the CPI does.
3. The Reserve Bank of India has adopted the CPI as its key measure of inflation for the purpose of monetary policy, not the WPI.

Therefore, the correct answer is (a) 1 and 2 only.