Q. With reference to the Producer Price Index (PPI), which of the following statements is/are correct?
1.The PPI measures the average change in the price that domestic producers receive for their output.
2.In India, the PPI is used to replace the WPI.
3.The PPI includes taxes and trade margins, while the WPI does not.
Select the correct answer using the code given below:

[A] 1 only

[B] 2 and 3 only

[C] 1 and 3 only

[D] 1, 2 and 3

Answer: A
Notes:

Explanation:

  • Statement 1 is correct. The PPI measures price changes from the perspective of the producer.
  • Statement 2 is incorrect. While there have been discussions and a committee report on introducing a PPI, it has not yet replaced the WPI as India’s primary inflation measure.
  • Statement 3 is incorrect. The PPI does not include taxes and trade margins, as it measures the price received by the producer. In contrast, the WPI includes indirect taxes.
Blog
Academy
Community