Economics · Inflation and Consumer Price Indices
A large retail bank is assessing the risk of its unsecured personal loan portfolio, which is primarily focused on urban salaried individuals. To track general retail inflation, which specific CPI index is most widely used, and what is the primary methodological difference of the CPI from the Wholesale Price Index (WPI)?
- 1CPI-U (Urban); Primary Difference: CPI includes only the prices of food and fuel, while WPI includes all sectors.
- 2CPI-C (Combined); Primary Difference: CPI captures price changes for the final consumer and includes services, while WPI captures prices at the first point of bulk transaction and excludes services.✓
- 3CPI-IW (Industrial Worker); Primary Difference: CPI tracks the price change of a basket of services only, while WPI tracks only goods.
- 4CPI-AL (Agricultural Labourer); Primary Difference: CPI is based on prices at the ex-factory level, while WPI is based on retail prices.
Correct answer
CPI-C (Combined); Primary Difference: CPI captures price changes for the final consumer and includes services, while WPI captures prices at the first point of bulk transaction and excludes services.
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