Headline inflation refers to the change in value of all goods on the basket. On which basis is the headline inflation measured?

1. A

   Wholesale Price Index

   Wholesale Price Index is a producer/wholesale measure and was historically India’s headline series, but the current official headline inflation for policy communication is CPI-Combined, not WPI. Choosing WPI dates the regime wrongly for this paper’s key.

2. B

   Consumer Price Index for Industrial Worker

   CPI-IW (industrial workers) is a subgroup index used for dearness allowance, not the all-India headline that RBI and the Union now cite as headline inflation. It is narrower than combined CPI. This option under-specifies the basket.

3. C

   Combined Consumer Price Index

   (c) Official key: Headline inflation in India is measured on the Combined Consumer Price Index (CPI-C / CPI-Combined: rural + urban), which tracks the change in the full CPI basket. That is the series used as headline CPI inflation. Among WPI, CPI-IW, combined CPI and urban CPI, the keyed basis is combined CPI.

4. D

   Urban Consumer Price Index

   Urban CPI is only the urban component of CPI, not the headline all-India combined series. Headline includes rural as well. Urban CPI alone is incomplete.

Summary. Official key is (c). Headline inflation refers to the full-basket price change; in India’s present statistical practice that headline is Combined CPI, not WPI, not CPI-IW, and not urban CPI alone. WPI remains important but is not this key. The basis to mark is Combined Consumer Price Index.