04A. Inflation

1. What are three diff inflation measurements with time

1. Month on Month

2. year on year

3. Quarter on Quarter

Different CPI indicators

1. CPI-C

2. CPI IW

3. CPI AL

4. CPI-RL

5. New planned base year of CPI

1. by NSO, MoSPI - 2012 - Consumer Expenditure Survey(now HCES)(for basket) - Infaltion targeting - monthly

2. by Labour Bureau(LB) - 2016 - Working Class Family Income & Expenditure Survey - Calculating Dearness Allowance - Monthly

3. by LB - 2019 - HCES - for Minimum wages and Agri wages - Monthly

4. by LB - 2019 - HCES - Rural wages - HCES - Monthly

5. 2024

How often HCES conducted

1. 5 years but planning to change it to 3 years

Weight reference year vs price reference year in CPI

1. year used to calculate the weight of item in an index

2. year that is used as a base year for calculation of price indices

CPI-C

1. no of items

2. weightage of categories

3. method of data collection

1. 299

2. ("Friends Make Home Feel Cozy & Pleasant)

Food and beverages - 40%(old-45%)

Miscellaneous(transport, communication, health, education) - 33%(old-28%)

Housing - 12%(10%)

Fuel and light - 5.5%(6.84%)

Clothing and footwear - 5.5%(6.5%)

Pan, tobacco and intoxicants - 3%(2.5%)

3. Modified mixed reference period- diff freq of data for diff products

1. Headline Infaltion

2. Core Infaltion

3. Refined core infaltion

1. CPI-C

2. CPI-C - Food - Fue&Light

3. Core Inflation - Petrol,diesel,lubricants for vehicles (Part of miscellaneous)

WPI

1. Components

2. calculated by

3. Base year

1. ->Mfg products - 65%

->Primary goods - food,non-food, crude oil, minerals (22%)

->Fuel&Power - Petrol,diesel(refined), Electricity, Coal (13%)

2. Office of Economic advisor under DPIIT (its in MoCommerce&Industry)

3. 2011-2012

PPI

1. Which taxes are included in PPI

1. Only production taxes

Inflation types based on speed

1. Creeping

2.Walking

3. Running

4. Galloping

5. Hyper

1. around 4%

2. 4-10%

3. 10-20%

4.20-50%

5. >50%

Infaltion types based on cause

1. Structural Inflation

2. Skewflation

3. Shrinkflation

4. Stagflation

5. Greedflation

6. Repressed Inflation

7. Credit inflation

8. Taxflation

1. Nature of economy ex: logistics

4. high inflation and low growth(high unemployment)

Japanification vs stagflation

1. Low inflation, Low growth and Low int rates too, unable to increase prices by gvt

2. High inflation and low growth

Effect of inflation on

1. Consumers

2. Producers

3. Borrowers

4, Lenders

5. Savings

6. Investments

7. Tax xollectors

8. Tax payers

1. Savings decreases

2. Profits in short term but in long term production cost increases and hence less profit

3. profitable because real int rate decreases

4. loss because real int rate decreases

5. loss

6. RBI will increase Interest rate so bonds int rate increase hence new investment is discouraged.

old investment will hurt in short term but profits in long terc

7. Direct tax increases but indirect tax may decrease due to fall in demand

8. Bracket creeping may happen

What is Fiscal drag and how is it helpful during high inflation

1. During high inflation, more taxes are collected because of bracket creeping , so less money with people hence economy slows down hence it is called fiscal drag

2. Fiscal drag means less money with people and slow economy - both can tackle inflation

Index of Industrial Production

1. Shares of diff categories

2. Current base year

3. New planned base year

1. Mfg - 77.6%; Mining -14%;Eelctricity-8%

2. 2011-12

3. 2022 - 2023

8 Core Industries of IIP(40 % of IIP)

1. name them

("Real Engineers Study Cold Chemistry Near Cement Factories")

A. Refinery

B. Electricity

C. Steel

D. Coal

E. Crude Oil

F. Natural gas

G. Cement

H. fertilisers