UPSC Previous Year Question | Prelims GS | 2020

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.

  1. 1 and 2 only
  2. 2 only
  3. 3 only
  4. 1, 2 and 3

Answer

Correct Answer

1 and 2 only

Explanation

Food has a much higher weight in CPI (about 46-50%) than in WPI. WPI covers goods only, while CPI includes services. RBI uses CPI (combined), not WPI, as its key inflation measure for policy, so statement 3 is wrong.

Topics: cpi vs wpi, economy, inflation & price indices, price indices