1.8 Inflation and price indices notes

1. 1.8.1Inflation: meaning, measurement and types by rate

   Inflation is a sustained rise in the general price level that lowers what each rupee can buy, measured as the yearly percentage change in a price index.

   Advanced · 5 min · Full course
2. 1.8.2Causes of inflation: demand-pull, cost-push, structural factors and the quantity theory of money

   Prices rise when demand outruns supply (demand-pull), when costs rise (cost-push), when supply cannot adjust (structural) or when money grows faster than output (quantity theory).

   Advanced · 5 min · Full course
3. 1.8.3Effects of inflation and related terms: deflation, stagflation, core inflation, base effect and the Phillips curve

   Unexpected inflation moves wealth from lenders and fixed-income earners to borrowers, and the Phillips curve describes the short-run trade-off between inflation and unemployment.

   Advanced · 5 min · Full course
4. 1.8.4Price indices: WPI, PPI and the CPI family – compilers, weights and base years

   India has several price indices: CPI (NSO) for consumers, CPI-IW and CPI-AL/RL (Labour Bureau) for workers, WPI (Office of the Economic Adviser) for wholesale goods, and a new Producer Price Index; the base years were reset in 2026.

   Advanced · 6 min · Full course
5. 1.8.5Controlling inflation: monetary, fiscal and supply-side measures

   Demand-led inflation is tackled by monetary and fiscal tightening, supply-led inflation by buffer stocks, imports, storage and market reform.

   Advanced · 5 min · Full course

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