Given what is cpi how it helps economy, different uses of cpi

1. Objective Of Consumer Price Index To measure the impact of ‘price’ change on the purchasing power of the after tax money incomes of wage and salary earner households. Focus was to track inflation Helps in Monetary policy to take decisions , to control inflation

2. Methodology Given - Consumer Price Index, Wages To Calculate: Real wages , Purchasing power Purchasing Power = (1/Consumer Price Index) 100 Real Wages = (Wages/Consumer Price Index) 100

3. Statement Of Business ScenarioGeneral Price level,Measurement Consumer price Index(CPI), Wholesale price Index(WPI), GDP deflator Each is a weighted average of several prices & is presented in the form of index numbers. CPI signals changes in prices facing the consumers. We are explaining annual movement in general price levels in India. Table summarizes the Data and the chart shows the trends in prices. Indian Scenario

4. Wages of Industrial Workers(Average ) of India This table shows the Average weekly wages of Industrial workers of India and CPI

5. Results & Findings Shown in the Table The Industrial Workers have the greatest buying power in 1993-94 The %tage Increase in the weekly wages for the year 1998-98 required to provide the same buying power that the employees had in 1993-94 : absolute difference i.e. 93.30 – 81.22 = 12.08

6. Importance of CPI In Business It helps to formulate Economic Policy, Escalate income payments & measure real earnings. It also measures purchasing power of the consumer in Rs. The purchasing power of the rupee is the value of a rupee in a given year as compared to a base year. When a time series is concerned with such rupee values as retail sales amounts or wage rates the price index is more frequently used to achieve deflation of such time series. The CPI is used in wage negotiations and wage contracts. It also helps in automatic adjustment of wages or the dearness allowance component of the wages.

7. Conclusion We are explaining annual movement in general price levels in India. Table summarizes the Data and the chart shows the trends in prices. CPI data are reported for Industrial Workers. Table shows the movement in prices between 1993-94 and 1998-99. Though the annual percentage change varies across different indices, the direction of change is similar. The Weekly wages are increasing but Real Wages are Decreasing.