Match the following inflation metrics with their values for FY 2024-25 (April-December):
List-I
(a) CPI Inflation (%)
(b) Food Inflation (%)
(c) Core Inflation (%)
(d) WPI Inflation (%)
List-II
(i) 2.1
(ii) 8.4
(iii) 5.4
(iv) 3.5
Choose the correct answer from the options given below:
(A) (a)-(ii), (b)-(iii), (c)-(i), (d)-(iv)
(B) (a)-(i), (b)-(iv), (c)-(iii), (d)-(ii)
(C) (a)-(iii), (b)-(ii), (c)-(iv), (d)-(i)
(D) (a)-(iv), (b)-(i), (c)-(ii), (d)-(iii)
The correct answer is (C) (a)-(iii), (b)-(ii), (c)-(iv), (d)-(i).
Explanation
Based on the economic data for the period of April to December 2024, the inflation metrics logically match the values as follows. The key trend was high food inflation driving up the headline CPI, while core and wholesale inflation remained much lower.
- (a) CPI Inflation (%) matches with (iii) 5.4%. This represents the headline retail inflation, which was moderately high during this period, staying within the upper range of the RBI’s tolerance band.
- (b) Food Inflation (%) matches with (ii) 8.4%. As the primary driver of headline inflation, food prices remained significantly elevated, making this the highest value in the list.
- (c) Core Inflation (%) matches with (iv) 3.5%. Core inflation, which excludes volatile food and fuel prices, was considerably lower than the headline CPI, indicating that underlying price pressures in the economy were easing.
- (d) WPI Inflation (%) matches with (i) 2.1%. Wholesale Price Index (WPI) inflation, which tracks prices at the producer level, was the lowest among the metrics, reflecting softer commodity prices.
Definitions of Inflation Metrics
- CPI (Consumer Price Index): This measures the average change in prices paid by urban and rural households for a basket of consumer goods and services. It is the main metric for retail inflation and the primary target for the RBI’s monetary policy.
- WPI (Wholesale Price Index): This tracks the change in prices of goods sold and traded in bulk by wholesale businesses. It was India’s headline inflation metric before 2014.
- Core Inflation: This is calculated by taking the CPI and excluding volatile items like ‘Food and Beverages’ and ‘Fuel and Light’. It is often seen as a better indicator of underlying, long-term inflation trends.