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Decoding Divergence in Inflation
Price inflation in India as measured by the Wholesale Price Index and the Consumer Price Index has shown diverging trends. While WPI indicates a disinflationary situation for 16 months, CPI indicates inflation. The in-depth exploration into the construction of the two indices indicated that different sample sizes and weights of commodity baskets of both indices along with price interventions by the government are responsible for a large part of the diverging trends in the two price indices.
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