Study on price indices

Abstract

For a developing country like India, the economy plays a major role in shaping its future. To study the change in economy, it is required to understand the rate at which prices of products (goods and services) increase and the importance that is given to each product in the economy relative to time scale. This is broadly explained by inflation of the country. And, this is where the relevance of studying price indices comes in. Price indices indicate economic growth of the country by comparing prices of goods & services of the current year with respect to a base year. The benefits of studying price indices are not just limited to gauging the economic development but also help in framing monetary policy of the country. The report aims to study various indices that are used to measure inflation in India. This will be followed by qualitative and quantitative analysis to comprehend the underlying reasons for fluctuations in the concerned components of the respective price indices. The report will focus on CPI and WPI. For analysis, the monthly data of CPI, WPI and their components have been taken from a period of January 2013 to April 2018.