3. A sustained rise in the
general price level over a period of time is
known as “inflation”.
In other words it is
defined as “the process by which price level
rises and the money loses its value”.

5. In India inflation is measured in two ways
that are as follows:
WHOLESALE PRICE INDEX (WPI)
&
CONSUMER PRICE INDEX (CPI)

7. The Wholesale Price
Index or WPI is the price of a
representative basket of wholesale
goods.
India- the only major
country that uses WPI
(1st published in 1902)

9. A measure of the average price
of consumer goods and services purchased by
households (1st published in 1970)
CPI indicates the change in the
purchasing power of the consumer
Published on a monthly basis

11. WHOLESALE PRICE INDEX CONSUMER PRICE INDEX
(WPI) (CPI)
 Index of prices prevailing in  Index of prices prevailing in
wholesale market retail market.
 Covers a fixed basket of  Index representing the basket
goods comprising primary of essential commodities
purchased by the average
articles, food articles,
consumer-food, fuel, lighting,
minerals, fuel prices, housing, clothing, articles etc.
machinery etc.
 Measured monthly in India;
 Measured weekly in India; more popular measure in
The primary inflation developed nations like USA,
measure used over here. UK, JAPAN.

13. DEMAND PULL INFLATION COST PUSH INFLATION

14. Demand pull inflation may be due to :
A)Rise in aggregate demand
B)Increase in money supply
C)Increase in government purchases

16. Cost push inflation may arise because of :
A)Increase in money wage rates
B)Increase in money prices of raw
materials