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The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket and averaging them. Prices are collected periodically, and the CPI is often used to measure inflation, reflecting the cost of living. The CPI is typically set against a base year. The index is set to 100 in the base year, and changes in the CPI indicate price changes compared to that year. A typical household might purchase a wide range of products and services. Items in the basket are weighted according to their importance or share in total household spending.
The Inflation Rate is the percentage increase in the general level of prices for goods and services over a period of time. It indicates how much prices have risen over a specific period, typically a year. Higher inflation decreases the purchasing power of money, meaning consumers can buy less with the same amount of money.It reflects the overall health of an economy. Moderate inflation is expected in a growing economy, but hyperinflation can indicate economic instability.The Inflation Rate is calculated using the following formula: Inflation Rate (%) = ((CPI in Current Year−CPI in Previous Year)/ (CPI in Previous Year))×100
At the end of FY 2023-24, Manipur reported the highest CPI at 207.1, followed closely by Tripura at 201.0. On the lower end, Delhi recorded a CPI of 169.4 and Chandigarh at 172.6. This disparity suggests considerable differences in the cost of living and economic conditions across different parts of the country. Interestingly, there were notable differences between rural and urban CPIs within states. For instance, in Manipur, the rural CPI (218.6) was significantly higher than the urban CPI (182.3). This pattern was also seen in Mizoram and some other northeastern states, indicating that rural areas in these regions may be experiencing higher price levels compared to their urban counterparts. Manipur recorded the highest inflation rate of 10.57%, which is considerably above the rates seen in other states. This high inflation rate aligned with Manipur’s high CPI, suggesting rapid price increases in the state. On the other hand, states/UTs like Delhi (2.29%), Goa (2.17%), and Sikkim (2.18%) experienced relatively low inflation rates. It’s worth noting that some states showed marked differences between rural and urban inflation rates. For example, in Haryana, the rural inflation rate (7.15%) was significantly higher than the urban rate (4.83%), which indicates differing economic pressures or policy impacts between rural and urban areas. The data also reveals that some economically empowered states like Maharashtra reported moderate CPI (181.4) and inflation (3.66%) figures, suggesting relatively stable price levels despite being major economic centres.
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