## CPI-based Inflation

What is CPI-based Inflation or Retail Inflation
What is CPI-based Inflation or Retail Inflation
When we talk about the rate of inflation, it often refers to the rate of inflation based on the consumer price index (CPI). The CPI tracks the change in retail prices of goods and services which households purchase for their daily consumption.

To measure inflation, we estimate how much CPI has increased in terms of percentage change over the same period the previous year. If prices have fallen, it is known as deflation (negative inflation). The Central Bank (RBI) pays very close attention to this figure in its role of maintaining price stability in the economy.

The CPI monitors retail prices at a certain level for a particular commodity; price movement of goods and services at rural, urban and all-India levels. The change in the price index over a period of time is referred to as CPI-based inflation, or retail inflation.

Generally, CPI is used as a macroeconomic indicator of inflation, as a tool by the central bank and government for inflation targeting and for inspecting price stability, and as deflator in the national accounts.

CPI also helps understand the real value of salaries, wages, and pensions, the purchasing power of the nation’s currency, and regulating rates. CPI, one of the most important statistics to ascertain economic health, is generally based on the weighted average of the prices of commodities. It basically gives an idea of the cost of the standard of living.

Simply put, CPI specifically identifies periods of deflation or inflation for consumers in their day-to-day living expenses. If there is inflation (when goods and services cost more) the CPI will rise over a period of time. If the CPI drops, that means there is deflation, or a steady reduction in the prices of goods and services.

How is CPI calculated (CPI formula)?

To calculate CPI, multiply 100 to the fraction of the cost price of the current period and the base period.

CPI formula: (Price of basket in current period / Price of basket in base period) x 100

# Latest Updates on CPI-based Inflation

Rural Manipur grapples with over 12 per cent inflation amidst unrest

3 min read Last Updated : Aug 16 2023 | 11:31 PM IST
MoSPI kicks off work for CPI base revision after over a decade: Report

2 min read Last Updated : Jul 18 2023 | 09:31 AM IST
Assam, Odisha among states clocking high rural inflation than urban in FY23

3 min read Last Updated : Feb 07 2023 | 09:15 AM IST
Not convinced of durable fall in inflation: RBI Deputy Guv Michael Patra

4 min read Last Updated : Aug 26 2022 | 11:36 PM IST
Inflation: Your soap or cookies may not be getting pricier but lighter

4 min read Last Updated : May 13 2022 | 08:20 AM IST
What explains RBI's 'near-unanimous' inaction even as inflation was rising?

4 min read Last Updated : May 06 2022 | 10:42 PM IST
Sensex falls 388 pts, Nifty holds 17,500; private banks shine, metals crack

3 min read Last Updated : Apr 12 2022 | 3:47 PM IST
RBI leaves key rates on hold amid Omicron risks; analysts weigh in

3 min read Last Updated : Dec 08 2021 | 11:36 AM IST
RBI leaves rates unchanged, says economy better prepared to deal with Covid

2 min read Last Updated : Dec 08 2021 | 11:10 AM IST
RBI keeps rates on hold to support recovery, 'sail towards normal times'

3 min read Last Updated : Oct 08 2021 | 12:25 PM IST
Stocks, debt yields slip on biggest US inflation hike in 13 years

4 min read Last Updated : Jul 14 2021 | 06:34 AM IST
The current 'inflation' is a mystery. FinMin, RBI must tread carefully

4 min read Last Updated : Jul 05 2021 | 08:21 AM IST
Covid-19 fallout: Outdated CPI, GDP may have to wait longer for revision

4 min read Last Updated : Apr 30 2021 | 11:28 PM IST
RBI's renewed challenges

3 min read Last Updated : Apr 27 2021 | 10:22 PM IST
February IIP contracts 3.6%; retail inflation rises to 5.5% in March

3 min read Last Updated : Apr 12 2021 | 7:26 PM IST
WPI inflation at 2.03% on costlier manufactured items, food prices ease

1 min read Last Updated : Feb 15 2021 | 12:48 PM IST
RBI's monetary and Centre's fiscal policy are moving hand-in-glove

5 min read Last Updated : Feb 05 2021 | 2:36 PM IST
Inflation worries play on RBI's mind, dampen mood of bond market

5 min read Last Updated : Feb 05 2021 | 1:04 PM IST
One nation one ombudsman: RBI to integrate consumer grievance redressal

2 min read Last Updated : Feb 05 2021 | 12:51 PM IST
RBI MPC highlights: Rates, stance unchanged, CRR to be restored, and more

3 min read Last Updated : Feb 05 2021 | 11:12 AM IST