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Commodity Price

Price indexes are a way of representing or measuring relative change in prices of goods or a particular bundle of goods in reference to those prevailing in an arbitrarily chosen year known as a base year. Price indexes were first started, to measure changes in cost of living. This was necessary in order to calculate dearness allowances or to measure increases in wages necessary to maintain parity in standard of living despite price increases. Price indexes which are most in use today are the Wholesale Price Index or the Producer Price Index and the Consumer Price Index. Consumer Price Index reflects the retail price changes of food, clothing real estate etc. The PPI/WPI measures changes in manufactured and wholesalers' goods.

Wholesale Price Index or Producers Price Index

The WPI is one of the most commonly used and commonly accepted price indexes in India. It is available on a weekly basis and has the shortest possible time lag of two weeks. Its is specifically due to these attributes that it is so widely accepted and is used so often as an indicator of the rate of the rate of inflation of the economy. The Office of the Economic Adviser to the Government of India, Ministry of Commerce & Industry, has introduced with effect from 1st April 2000, the revised series of the Index of Wholesale Prices in India of base 1993-94=100 in replacement of the earlier WPI series with base 1981-82=100.

The revised series (1993-94) has 435 items. All items which occupy a sizeable place in the economy transactions in the economy have been included in the revised series. Thus the revised series have an updated and a basket of commodities which better represent the current tastes and preferences have been chosen. 136 new items have been added to the basket of the revised series, while 150 items have been dropped from the existing series. Thus 68% of the items/commodities that were there previously are common to the existing and revised series.

Some of the important items that enter the WPI commodities basket for the first time are Electricity for Railway Traction, Purified Terephthalic Acid(PTA), Injection Molded Plastic Items, Oxygen Gas in Cylinder, Railway Sleepers (Cement product), Thinner, MS/SS Ingots, Cold Rolled Sheets, LPG Cylinder, Jelly Filled Telephone Cables, Color TV Sets, Computer and Computer based Systems. The items that have been excluded are Mica, Imported Petroleum Crude, Indigenous Petroleum Crude, Khadi, Handloom Cloth, Broad Gauge open Wagons, Wrist Watches.

A comparison of the indices of the updated series with the existing series, shifted to 1993-94 base, shows that the general behavior of the two series is fairly similar despite differences in the weighting diagram and commodity coverage.

Consumer Price Index or Cost of Living Index

This Index acts as inflationary indicator and gauges the change in the cost of a specified basket of products and services like housing, electricity, food and transportation. This index is published every month and is also known as the Cost of Living Index.

The All India Consumer Price Index for Urban Non-Manual Employees CPI(UNME) with base 1984-85=100, for the month of June, 2006 has been published by the Central Statistical Organization (CSO), Ministry of Statistics and Program Implementation together with the indices for 59 selected urban centers in India. The All-India CPI (UNME) for June, 2006 is 477, amounting to 6 points more than the index for the previous month. At the group level, the index for June, 2006 when compared to the last month i.e. May, 2006, has increased by 2.19 percent in respect of "Food, Beverages and Tobacco" group, while that of the "Miscellaneous" group increased by 1.04 percent. The index for the month of June, 2006 has shown a rise of 6.5% on a y-o-y basis.

The following table gives the CPI (UNME) for June, 2006 in respect of four metropolitan cities of India, together with the corresponding indices for the previous month and also for June, 2005.

City June, 2005 May, 2006 Tune, 2006
Kolkata411428433
Chennai532557557
Delhi463483494
Mumbai442462468

Consumer Price Index or Cost of Living Index

This Index acts as inflationary indicator and gauges the change in the cost of a specified basket of products and services like housing, electricity, food and transportation. This index is published every month and is also known as the Cost of Living Index.

The All India Consumer Price Index for Urban Non-Manual Employees CPI(UNME) with base 1984-85=100, for the month of June, 2006 has been published by the Central Statistical Organization (CSO), Ministry of Statistics and Program Implementation together with the indices for 59 selected urban centers in India. The All-India CPI (UNME) for June, 2006 is 477, amounting to 6 points more than the index for the previous month. At the group level, the index for June, 2006 when compared to the last month i.e. May, 2006, has increased by 2.19 percent in respect of "Food, Beverages and Tobacco" group, while that of the "Miscellaneous" group increased by 1.04 percent. The index for the month of June, 2006 has shown a rise of 6.5% on a y-o-y basis.