Inflation occurs when there is a broad increase in the prices of goods and services. It reduces the purchasing power of money as seen in Iran.
How is it measured?
- The Wholesale Price Index (WPI) and the Consumer Price Index (CPI) are used to measure inflation in India.
- But CPI is the primary source for measuring inflation since 2013, based on recommendations of the Urjit Patel Committee
Who measures inflation in India?
- The Ministry of Statistics measures CPI, while the WPI is measured by the Ministry of Commerce.
Challenges of Inflation
- Reduced Purchasing Power
- Erosion of Savings
- Higher Borrowing Costs
- Reduced Competitiveness
Source: The Hindu