Consumer price index

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Given what is cpi how it helps economy, different uses of cpi

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Consumer price index

  1. 1. Objective Of Consumer Price Index<br />To measure the impact of ‘price’ change on the purchasing power of the after tax money incomes of wage and salary earner households. <br />Focus was to track inflation<br />Helps in Monetary policy to take decisions , to control inflation<br />
  2. 2. Methodology<br />Given - Consumer Price Index, Wages<br />To Calculate: Real wages , Purchasing power<br />Purchasing Power<br /> = (1/Consumer Price Index) 100<br />Real Wages<br /> = (Wages/Consumer Price Index) 100<br />
  3. 3. Statement Of Business ScenarioGeneral Price level,Measurement<br />Consumer price Index(CPI), Wholesale price Index(WPI), GDP deflator<br />Each is a weighted average of several prices & is presented in the form of index numbers.<br />CPI signals changes in prices facing the consumers.<br />We are explaining annual movement in general price levels in India. Table summarizes the Data and the chart shows the trends in prices.<br /> Indian Scenario<br />
  4. 4. Wages of Industrial Workers(Average ) of India<br />This table shows the Average weekly wages of Industrial workers of India and CPI<br />
  5. 5. Results & Findings<br />Shown in the Table<br />The Industrial Workers have the greatest buying power in 1993-94<br />The %tage Increase in the weekly wages for the year 1998-98 required to provide the same buying power that the employees had in 1993-94 : absolute difference i.e. 93.30 – 81.22 = 12.08<br />
  6. 6. Importance of CPI In Business<br />It helps to formulate Economic Policy, Escalate income payments & measure real earnings.<br />It also measures purchasing power of the consumer in Rs. The purchasing power of the rupee is the value of a rupee in a given year as compared to a base year.<br />When a time series is concerned with such rupee values as retail sales amounts or wage rates the price index is more frequently used to achieve deflation of such time series.<br />The CPI is used in wage negotiations and wage contracts.<br />It also helps in automatic adjustment of wages or the dearness allowance component of the wages. <br />
  7. 7. Conclusion<br />We are explaining annual movement in general price levels in India. Table summarizes the Data and the chart shows the trends in prices.<br />CPI data are reported for Industrial Workers.<br />Table shows the movement in prices between 1993-94 and 1998-99. Though the annual percentage change varies across different indices, the direction of change is similar.<br />The Weekly wages are increasing but Real Wages are Decreasing.<br />

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