Consider the following statements:
1. The weightage of food in Consumer Price Index (CPI) is higher than that in Wholesale Price Index (WPI).
2. The WPI does not capture changes in the prices of services, which CPI does.
3. Reserve Bank of India has now adopted WPI as its key measure of inflation and to decide on changing the key policy rates.
Which of the statements given above is/are correct?
Explanation
Statement 1 is correct: In the Consumer Price Index (CPI-Combined), food and beverages carry a dominant weighting of approximately 45.86% (around 50% including allied consumables), whereas in the Wholesale Price Index (WPI), primary food articles and manufactured food products combined carry a significantly lower weight of roughly 24.38%.
Statement 2 is correct: The WPI tracks only wholesale prices of manufactured goods, fuel, and primary commodities, completely excluding the services sector. In contrast, CPI measures the retail price basket covering both goods and consumer services (such as healthcare, transport, education, and housing).
Statement 3 is incorrect: Following the recommendations of the Urjit Patel Committee in 2014, the Reserve Bank of India adopted CPI-Combined (headline retail inflation), rather than WPI, as its formal anchor for setting monetary policy rates.
Hence, statements 1 and 2 are correct — Option A.