Paragraph: A single number for inflation is an aggregate across different commodities and services
A single number for inflation is an aggregate across different commodities and services – the price rise differs for different items of consumption. So, the single number is arrived at by assigning weights to different commodities and services. For WPI, the weights in production are used; for CPI, the consumption basket is used. But people are not homogeneous. The consumption basket is vastly different for the poor, the middle classes, and the rich. Hence, the CPI is different for each of these classes and a composite index requires averaging the baskets.
Q1. Which one of the following statements best reflects the most logical, rational and crucial message conveyed by the passage?
(a) We must use WPI exclusively in measuring price rise and CPI should be done away with.
(b) The present calculation of inflation rate does not correctly measure price rise of individual item/commodity.
(c) Inflation data under-presents services in the consumption basket.
(d) Knowledge of inflation rate is not really of any use to anybody in the country.
UPSC Prelims 2025 CSAT
Correct Answer: (b) The present calculation of inflation rate does not correctly measure price rise of individual item/commodity.
Explanation: The passage clearly explains that inflation is represented by a single number, which is an aggregate measure across various commodities and services. It emphasizes that the price rise differs significantly for different items and for different groups of people (poor, middle class, rich). Thus, the single inflation number does not accurately reflect the actual price rise experienced by individuals or specific commodities. Hence, option (b) correctly captures the most logical, rational, and crucial message conveyed by the passage.
Option-wise analysis:
(a) Incorrect. The passage does not suggest using WPI exclusively or discarding CPI.
(b) Correct. Matches the main idea of the passage.
(c) Incorrect. The passage does not specifically mention under-representation of services.
(d) Incorrect. The passage does not imply that inflation data is useless; rather, it highlights limitations in the current method of calculation.
