Which of the following goods are included to estimate food inflation in India ? 1. Wheat 2. Paddy 3. Tobacco 4. Sugar Select the correct answer using the code given below :
- A.1,2 and 3
- B.2,3 and 4
- C.1,3 and 4
- D.1,2 and 4
Correct answer
Explanation
The correct answer is D, 1, 2 and 4. Wheat, paddy and sugar are food items counted in the food indices, while tobacco is not a food and is kept out of them.
India measures food inflation through the food index of the Wholesale Price Index and the Consumer Food Price Index (CFPI). The WPI food index combines 'food articles' from the primary articles group, such as paddy, wheat, pulses, vegetables, fruit and milk, with 'food products' from the manufactured group, such as sugar, edible oils and dairy products. Tobacco is placed outside food: in the CPI it sits in a separate group called pan, tobacco and intoxicants, and in the WPI it is counted with non-food items and manufactured tobacco products.
A is wrong: it includes tobacco, which is not part of the food basket.
B is wrong: it includes tobacco and leaves out wheat.
C is wrong: it includes tobacco and leaves out paddy.
Exam tip: food inflation = WPI food index or CFPI; tobacco is grouped with pan and intoxicants, not food.
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