Bulletin – September Quarter 2014 Measures of Inflation in India Abstract

India has experienced persistently high inflation in recent years, despite a period of below-trend economic growth. As a result, controlling inflation has become a key objective for policymakers. The two main indicators of inflation in India are the wholesale price index (WPI) and the consumer price index (CPI). Although the WPI has traditionally been the most widely used measure for assessing inflationary pressures, the Reserve Bank of India (RBI) recently conducted a review of its monetary policy framework, which recommended adopting a flexible inflation-targeting regime, based on headline CPI inflation. This article outlines the two main price measures available for the Indian economy and discusses their role in India's monetary policy.

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