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  • Vinay Nair

Government manages to keep inflation in check

I think we are all a little terrified by the word inflation!

Inflation is simply the rise in price of goods and services. Inflation is indicative of the decrease in the purchasing power of a unit of a country’s currency and is expressed as a percentage. Higher inflation leads to an increase in the cost of living and ultimately a slump in economic growth.

A certain level of inflation is required in an economy so as to promote investments and demotivate hoarding of money.

In India, the Ministry of Statistics and Programme Implementation measures inflation using two indices –

Consumer Price Index (CPI)

CPI measures changes in price of daily goods and services.

Wholesale Price Index (WPI)