Name: Understanding the Consumer Price Index (CPI)
Uploaded: 2019-07-19
Duration: 5 min 26 s
Description: Learn about index numbers, their significance in economics, and how they help us compare data over time in this engaging and informative video.

Question

Given the following data-

Year	CPI of industrial workers $(1982 = 100)$	CPI of agricultural labourers $(1986 = 100)$	WPI $(1993 - 94 = 100)$
$1995 - 96$	$313$	$234$	$121.6$
$1996 - 97$	$342$	$256$	$127.2$
$1997 - 98$	$366$	$264$	$132.8$
$1998 - 99$	$414$	$293$	$140.7$
$1999 - 00$	$428$	$306$	$145.3$
$2000 - 01$	$444$	$306$	$155.7$
$2001 - 02$	$463$	$309$	$161.3$
$2002 - 03$	$482$	$319$	$166.8$
$2003 - 04$	$500$	$331$	$175.9$

Are they comparable?

Accepted Answer

Given the following data-

Year CPI of industrial workers
$(1982 = 100)$ CPI of agricultural labourers
$(1986 = 100)$ WPI
$(1993 - 94 = 100)$

$1995 - 96$ $313$ $234$ $121.6$

$1996 - 97$ $342$ $256$ $127.2$

$1997 - 98$ $366$ $264$ $132.8$

$1998 - 99$ $414$ $293$ $(1986 = 100)$

$1999 - 00$ $428$ $306$ $145.3$

$2000 - 01$ $444$ $306$ $155.7$

$2001 - 02$ $463$ $309$ $161.3$

$2002 - 03$ $482$ $319$ $166.8$

$2003 - 04$ $500$ $331$ $175.9$

No, the index number is not comparable because of the following reasons:

Base periods for CPI of industrial workers, urban non-manual workers, agricultural labourers and WPI are different.

Commodities and their weightage in different index numbers may be different.

Items	Monthly Expense (Rs.)	GST Rate %
Cereals	$1500$	$0$
Eggs	$250$	$0$
Fish, Meat	$250$	$0$
Medicines	$50$	$5$
Biogas	$50$	$5$
Transport	$100$	$5$
Butter	$50$	$12$
Babool	$10$	$12$
Tomato Ketchup	$40$	$12$
Biscuits	$75$	$18$
Cakes, Pastrics	$25$	$18$
Branded Garments	$100$	$18$
Vacuum Cleaner, Car	$1000$	$28$

Important Questions on Index Numbers

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