Consumer Price Index in India
Consumer Price Index (CPI) measures the changes in the price level of the basket of consumer products and services such as food, transportation and medical items. A consumer price index or CPI is determined by taking the average of price and dividing it with the overall weight of goods. High CPI represents that the prices of the consumer goods rise while a low CPI indicates that the inflation rate is decreasing and the prices of consumer goods are decreasing.
The CPI of India for the year 2017 reported to be around 131.4, which has increased from the last year meaning that the price level of India has been increasing. In the Year 2016, the CPI level was around 130.4. The lowest CPI of India was around 86.11 in the year 2011. The CPI in the year of 2015 was about 126.2,and around the year 2014, the CPI was 120. The CPI in the year 2013 reported to be around 113.
Looking the overall CPI of India for the last few years, it has been greatly increasing from the lowest 86.11 in the year 2011 to 131.4 in the current year. The reason for increase in the CPI is mainly due to inflation and Government Sales tax.
International Data of CPI
The CPI in some other countries were higher than India.Current CPI of United Statesreported to be around 243.85, the Euro Union was around 101.92,and Pakistan CPI was 216.33. It means that the price level of India is much steadier and better compared to other countries.
Movements Of Price Levels In India Harvard Case Solution & Analysis
Inflation Rate in India
Inflation rate basically, determines the price level of goods and services. If the inflation rate of a country increases, the value of its currency decreases and the prices of goods increases. The inflation rate generally increases when the economic conditions of a country are poor and the purchasing power of people declines. For reducing the inflation rate government can take certain steps such as using the tool of monetary policy.
The current inflation rate of India was found to be around 2.18% in the year 2017 which has decreased from 2.99%. Main reason of thisdrop was the fall in prices of food and vegetables. The reduction of inflation rate also caused the prices of fuel and powerto decrease. The average inflation rate of India in the year 2016 was 4.97%,and in the year 2015 it was around 5.88%. In the year 2014, the inflation reported to be 6.37%, while in the year 2013, the inflation rate was 10.92%.
The inflation rate had gradually decreased over the past couple of years because of the steps taken by the government in controlling the inflation and improving the economy of the country which has resultedin making the country progress greatly in trade and GDP.
International Data of Inflation
Looking at some of the countries’ inflation rates, India’s current inflation rate puts the country in a strong position compared to other countries. Some of the countries have high inflation rate such as Pakistan 5.50%,and Russia 4.10%. Some of the countries with lower inflation rate than India are the United States of America whose inflation rate is about 1.90%, Euro Area has an inflation rate of 1.30%,and Japan has the lowest inflation rate of 0.40%...........
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