{"id":260029,"date":"2023-09-14T20:56:56","date_gmt":"2023-09-14T15:26:56","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=260029"},"modified":"2023-09-14T20:56:56","modified_gmt":"2023-09-14T15:26:56","slug":"our-inflation-index-lens-is-hazy-but-clear-enough","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/our-inflation-index-lens-is-hazy-but-clear-enough\/","title":{"rendered":"Our inflation index lens is hazy but clear enough"},"content":{"rendered":"\n

Source<\/strong>– The post is based on the article \u201cOur inflation index lens is hazy but clear enough\u201d <\/strong>published in the \u201cmint\u201d <\/strong>on 14th September 2023<\/strong>.<\/p>\n

Syllabus: <\/strong>GS3- Indian economy<\/p>\n

News<\/strong>– In the latest official release for August, it was reported that inflation had eased to 6.8% year-on-year from the previous 15-month high of 7.4% in July.<\/p>\n

Why are doubts being raised on accuracy of CPI data? <\/strong><\/h2>\n

The basket of goods and services<\/strong> monitored by the CPI has not been refreshed in approximately a decade. But, our consumption habits<\/strong> may have evolved.<\/p>\n

India is primarily a nation with modest means. Food items<\/strong> make up a substantial portion <\/strong>of the basket. When combined with beverages and tobacco, food items constitute nearly half of the index. <\/strong><\/p>\n

The rest is composed of categories like clothing and footwear, fuel and lighting, housing, and miscellaneous items. <\/strong><\/p>\n

A general formula<\/strong> that was appropriate a decade ago, based on India’s consumption expenditure survey of 2011-12,<\/strong> may no longer be as accurate.<\/p>\n

In emerging economies<\/strong>, as incomes rise, the proportion of food expense<\/strong>s in monthly budgets usually decreases, while other expenditures<\/strong> increase. Today, even low-income earners are known to pay telecom bills. <\/strong><\/p>\n

As the last major consumption survey<\/strong> conducted in 2017-18 was discarded by the government due to discrepancies. There is a lack of a clear understanding of consumption patterns<\/strong> for revising the CPI basket.<\/p>\n

Why is CPI index still relevant for showing inflation trends?<\/strong><\/h2>\n

CPI data may not depict a clear picture of inflation scenario<\/strong>. But, it does not diminish its usefulness<\/strong>. An updated index <\/strong>may not significantly alter inflation readings.<\/p>\n

The inflation index doesn’t need to reflect absolute truth<\/strong> as an indicator of trends<\/strong>. What matters is not the clarity of the picture<\/strong> but the direction and pace<\/strong> of its change.<\/p>\n

As long as a central bank can grasp price fluctuations and stabilizations,<\/strong> there is no need to doubt CPI index.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Source– The post is based on the article \u201cOur inflation index lens is hazy but clear enough\u201d published in the \u201cmint\u201d on 14th September 2023. Syllabus: GS3- Indian economy News– In the latest official release for August, it was reported that inflation had eased to 6.8% year-on-year from the previous 15-month high of 7.4% in… Continue reading Our inflation index lens is hazy but clear enough<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,8184,11125],"class_list":["post-260029","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-indian-economy","tag-mint","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/260029","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=260029"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/260029\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=260029"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=260029"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=260029"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}