The Ministry of Statistics and Programme Implementation (MoSPI) released data indicating that retail inflation rose marginally to 0.7% in November 2025, up from a historic low of 0.25% in October
What is Driving the Numbers?
- The Drag Factor (Food Deflation): The primary reason for low inflation is the contraction in food prices.
- Cause: Driven by a high Base Effect from last year and falling prices of TOP crops (Tomatoes, Onions, Potatoes).
- Exception: Edible Oils (Mustard and Coconut) saw a sharp price rise, bucking the general trend.
- The Push Factor (Fuel Inflation): Fuel inflation accelerated to 2.3%, partially offsetting the relief from food prices.
Consumer Price Index (CPI)
What is the CPI?
- Definition: An index that tracks changes in the retail prices of a fixed basket of goods and services purchased by households for daily consumption.
- Indicator: It serves as a primary tool to measure Retail Inflation.
Who releases it?
- Agency: The National Statistical Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI).
- Frequency: Released monthly.
- Coverage: Compiles data for Rural, Urban, and Combined sectors (All India & State-wise).
How is it calculated?
- Base Year: The current base year is 2012.
Significance of CPI
- Inflation Targeting: It is the primary metric used by the Reserve Bank of India (RBI) and the government for inflation targeting and price stability.
- Economic Indicator: Measures the Purchasing Power of the currency and the Cost of Living.
- Policy Tool: Used as a deflator in national accounts and for regulating dearness allowance (DA), wages, and pensions.
Q . With respect to the Consumer Price Index (CPI), consider the following statements:
- It serves as the primary metric used by the Reserve Bank of India (RBI) for inflation targeting.
- The index is compiled and released by the Office of the Economic Adviser under the Ministry of Commerce and Industry.
- It is used as a tool to regulate the dearness allowance (DA) and wages.
Which of the statements given above are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
Sol C
Statement 1 is correct: In 2014, the Reserve Bank of India (RBI) adopted the Consumer Price Index (Combined) as the primary metric for measuring inflation and for its inflation targeting framework.
Statement 2 is incorrect: The CPI is compiled and released by the National Statistical Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI). The Office of the Economic Adviser (Ministry of Commerce) releases the Wholesale Price Index (WPI).
Statement 3 is correct: CPI data, specifically CPI-IW (Industrial Workers), is the benchmark used to calculate the Dearness Allowance (DA) for government employees and to adjust wages and pensions to offset the cost of living.
