Q. Consider the following statements:
1.The weightage of food in the Consumer Price Index (CPI) is higher than that in the Wholesale Price Index (WPI).
2.The WPI does not capture changes in the prices of services, which the CPI does.
3.The Reserve Bank of India uses WPI as its key measure of inflation to decide changes in policy rates.
Which of the statements given above is/are correct?
Answer: A
Notes:
Explanation:
- Statement 1 is correct: CPI has a higher weightage for food than WPI.
- Statement 2 is correct: WPI covers only goods; it does not include services.
- Statement 3 is incorrect: RBI mainly uses CPI (specifically CPI-Combined) as its primary inflation measure for monetary policy decisions, not WPI.
Source- ET
