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Inflation cpi,wpi

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Simple ppt on inflation cpi,wpi

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Inflation cpi,wpi

  1. 1. 1 January 2015 1Team-1 Inflation and its Components (WPI,CPI) Presented by, S.Abarna R.Rachel
  2. 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?
  4. 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. 5. 1 January 2015 5Team-1 Graph-Wholesale Inflation
  6. 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. 7. 1 January 2015 7Team-1 Graph-Retail Inflation
  8. 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. 9. 1 January 2015 9Team-1 Graph-Food Inflation
  10. 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. 11. 1 January 2015 11Team-1 Graph-Housing Inflation
  12. 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. 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. 14. 1 January 2015 14Team-1 Graph-Education Inflation
  15. 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. 16. 1 January 2015 16Team-1 Graph-Medical Inflation
  17. 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. 18. 1 January 2015 18Team-1 WPI and its components
  19. 19. 1 January 2015 19Team-1 CPI and its components
  20. 20. 1 January 2015 20Team-1 WPI and CPI
  21. 21. 1 January 2015 21Team-1 WPI-Importance
  22. 22. 1 January 2015 22Team-1 CPI-Importance
  23. 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. 24. 1 January 2015 24Team-1 Laspeyre’s Formula
  25. 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