Topic 3.4 · Economy · Inflation

Inflation in India

Inflation in India is studied as part of "Inflation" (Indian Economy — Basics) in Economy. Inflation erodes purchasing power; its measurement through CPI and WPI and its control through monetary policy are central to the RBI's mandate.

In the examination context, inflation in india carries conceptual questions that test both factual recall and analytical understanding. Revise this topic in sequence with the rest of the chapter so that chronological and thematic links are clear.

Important Facts

Demand-pull: Inflation from excess aggregate demand
CPI: Consumer Price Index — retail inflation
WPI: Wholesale Price Index — manufactured goods
Headline inflation: Includes food and fuel

Key Points

CPI — Consumer Price Index — retail inflation
WPI — Wholesale Price Index — manufactured goods
Headline inflation — Includes food and fuel
Demand-pull — Inflation from excess aggregate demand

Important Names

PhillipsIrving Fisher

Important Dates

2014	RBI adopted inflation targeting (4% ± 2%)

Exam-Oriented Notes

»CPI is the RBI's primary inflation gauge. Inflation targeting is set under the amended RBI Act with a 4% target.