Analyze the Factor Responsible for Change in Price Index to Measure Inflation in India

This research deals with the probable reasons, benefits obtained behind this change in price index and try to study the impact it will have on different components. The main objective of the research work is to analyze the factors responsible for change in price index to measure inflation in India. Various components of Consumer price Index and Wholesale price Index is analyzed in order to find out the rationale behind change in price index. To do so data has been collected from government portals for CPI and WPI for the duration of three years starting from 2014 to 2016. Analysis of data is done by comparing the means of the various components of CPI and WPI with means of Index itself. Major findings of the research was food and beverages are the component having maximum impact on inflation in our country. Vegetables, pulses are the major contributor to the food inflation in our country. Tobacco products are also have significant role to play in rising inflation in our country. Food and beverages given less weightage in Wholesale price Index and exclusion of service sector in calculating the Wpi inflation are majorly responsible for change in price index to measure inflation in India.