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SAI INTERNATIONAL SCHOOL

Statistics for Economics
Class-XI

MODULE-70

Consumer Price Index or Cost of Living Index Number
The consumer price index is the index number which measures the averages change in
prices paid by the specific class of consumers for goods and services consumed by
them in the current year in comparison with base year.

Construction of Consumer Price Index

 Selection of the consumer class
 Information about the family budget
 Choice of base year
 Information about prices
 Weightage – There are two ways of according weights
o Quantity weight
o Expenditure weight

The following formula is used to find consumer’s price index
Consumer Price Index (CPI) = [latex]\frac{\Sigma W R}{\Sigma W}[/latex]

Wholesale Price Index (WPI)
The Wholesale Price Index (WPI) measures the relative changes in the prices of
commodities traded in the wholesale markets. In India, the wholesale price index
numbers are constructed on weekly basis.

Industrial Production Index
The index number of industrial production measures changes in the level of industrial
production comprising many industries. It includes the production of the public and the
private sector. It is a weighted average of quantity relatives. The formula for the index is
[latex]P_{01}=\frac{\Sigma q_{1} \times W}{\Sigma W} \times 100[/latex]

Construction of Index Number of Industrial Production

 Classification of industries
 Statistics or data related to industrial production
 Weightage