Consumer Price Index and Inflation : Current India Inflation Rate in 2013

Consumer Price Index
Inflation is described as continuously rising prices, or the continuous fall in value of the money viz. Dollar or Rupee. The inflation rates are based upon the consumer price index (CPI). The Consumer Price Index is a measure of the average price which consumers spend on a market-based “basket” of goods and services. 

Inflation based upon the consumer price index (CPI) is the main inflation indicator in most countries. The CPI inflation rates in the table are presented both on a monthly basis, compared to the month before, as well as on a yearly basis, compared to the same month last year.

The data required to arrive at the CPI is collected by the authorised designated agencies through a scientific sampling of prices on about 80,000 items (good and services). They gather, record and update the data monthly, which serves to track and measure price changes in the Consumer Price Index (CPI).

Does the CPI reflect spending trends with price change?

The Consumer Price Index does not include spending habits or trends for anyone living in rural areas, those in the Armed Forces, or those in institutions, like prisons. Specifically, the CPI includes data on the spending habits of two population groups:

  • All urban (U) consumers, and
  • Urban wage (W) earners and clerical workers

The Bureau of Labor Statistics (BLS) in USA reports that the all urban consumer group represents about 87 percent of the total U.S. population.

What goods and services are included in the CPI ?

There are more than 200 categories for all goods and services which are tracked to measure the CPI for a particular period and these are placed within following major groups:

  • Food and Beverages: meat, milk, beer, wine, snacks, etc.
  • Housing: rent of primary residence, owners’ equivalent rent, fuel oil, bedroom furniture, etc.
  • Apparel: cloths like pants, shirts, sweaters, etc.
  • Transportation: vehicles, airline fares, gasoline, etc.
  • Medical Care: hospital services, drugs, medical supplies, glasses, etc.
  • Recreation: TV, pets, movies, pets, etc.
  • Education and Communication: college costs, telephone services, computer software, postage, etc.
  • Other: smoking products, haircuts and other personal services

The CPI does not include savings or investment items, like stocks and bonds or real estate.

Inflation in India

The inflation rate is based upon the consumer price index (CPI). The method of declaring inflation based on CPI can be illustrated with the following two overviews:

  • The annual inflation by year for India - comparing the December CPI to the December CPI of the year before and
  • The average inflation by year for India - the average of 12 monthly inflation rates of a calendar year

Average rate of inflation in India

As per statistics, Provisional annual inflation rate based on all India general CPI (Combined) for December 2013 on point to point basis (December 2013 over December 2012) is 9.87% as compared to 11.16% (final) for the previous month of November 2013. The corresponding provisional inflation rates for rural and 
urban areas for December 2013 are 10.49% and 9.11% respectively. Inflation rates (final) for rural and urban areas for November 2013 are 11.66% and 10.53% respectively.

The average rate of inflation in India was 9.87% % in the year ending December 2013.

Inflation or price rise is a constantly changing phenomenon and the variables contributing in the Consumer Price Index also change according the socio-economic profile of the populace comprising of the particular territory at a given time and the political situation and other factors.


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