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Difficulty: EasyInflation Types, Price Indices (CPI, WPI), and Price Control Mechanisms

Consider the following statements regarding the Wholesale Price Index (WPI) in India:

1. It captures price variations at the bulk sale level prior to reaching retail consumers.
2. It accounts for price changes in both goods and services.
3. It is published by the Office of Economic Adviser in the Ministry of Commerce and Industry.

Which of the statements given above are correct?

  1. 1 and 3 onlyAnswer
  2. B
    1 and 2 only
  3. C
    2 and 3 only
  4. D
    3 only

Answer

Statements 1 and 3 are correct.
The combination indicating statements 1 and 3 only is correct because WPI measures prices at the wholesale bulk transaction level and is compiled by the Office of Economic Adviser under the Ministry of Commerce and Industry. Services are not included in WPI, making statement 2 false.

Step-by-Step Solution

1
Evaluate Statement 1 regarding the transaction level of WPI.
Statement 1 is correct.
WPI tracks price changes at the first point of bulk sale in domestic markets before goods reach retail outlets.
2
Evaluate Statement 2 regarding product coverage in the WPI commodity basket.
Statement 2 is incorrect.
Unlike the Consumer Price Index (CPI), WPI covers only physical commodities (Manufactured Products, Primary Articles, Fuel & Power) and excludes services.
3
Evaluate Statement 3 regarding the compiling and releasing authority.
Statement 3 is correct.
WPI is released on a monthly basis by the Office of Economic Adviser, Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry.

Key Concept

Wholesale Price Index (WPI) basket composition, coverage, and publishing agency
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Topics

Inflation Types, Price Indices (CPI, WPI), and Price Control Mechanisms