as most of you have been reading in the papers about inflation being negative in india, you must be wondering why are prices rising, instead of falling.a little explanation should help.
in india we use two primary indices for measuring the rate of inflation, the consumer price index(cpi) and the wholesale price index(wpi).what the national media is shouting from the rooftops is about the latter being negative in recent times,which basically is made up of items like foodgrains,crude oil etc ,where a small percentage change or even a negative one affects the government and economic entities dealing in bulk with these products.in no way does it affect the end consumer, people like you and me.
what affects us is the cpi.the cpi is primarily composed of finished goods and services that households purchase.the cpi by the way,has always shown a rising trend,except for few exceptions,to use a cliche the cpi's movement has been, "onward and upward".hence all the hoopla and hype regarding the inflation being negative in india should not be much of a concern to the common man.
p.s. - plz excuse me for updating my blog after almost a year,i've been a very lazy fellow.to use a metaphor, i'm like a horse who needs a gadfly to make him run,today when i opened my insti mail box, i was instantly bitten by the gadfly.more on this later.
