What are the Different Types of CPI in India and their Functions?

What Are the Types of CPI in India?

How to Calculate Inflation Using CPI?

How to Calculate Inflation Using GDP?

What Are the Uses of Consumer Price Index?

What Are the Demerits of the Consumer Price Index?

FAQs About the Types of CPI

In how many categories is CPI divided?

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CPI has been classified into eight categories: education, housing, transportation, recreation, communication, clothes, medical care, and food and beverages.

What are the two methods of CPI?

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Irrespective of the CPI type, there are two methods, which are widely applied to compute the rate of CPI. They are the aggregative expenditure method and family budget method.

Who determines inflation rate in India?

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According to the RBI Act 1934, the inflation target in India is determined by the central bank of the nation i.e. the Reserve Bank of India alongside the Indian Government.

If CPI shows prices going up, should I increase my term insurance cover too?

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Exactly, you should! When CPI shows inflation. It means money’s value is dropping over time. A ₹50 lakh cover might seem big today, but it might not cover your family’s future expenses 1- or 20-years from now. Updating your term insurance plan to match the changing cost of living is a smart move.

I'm confused about how the CPI relates to my family's financial safety. Can you explain?

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The CPI shows the real cost of living. If it goes up, your family will need more money to maintain the same lifestyle in the future. Life insurance acts as a financial safety net, so choosing the right sum assured should factor in inflation; otherwise, your family could fall short.

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