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?

1. A

   1 and 2 only

   1 and 2 only. Food weighs more in CPI than WPI; WPI skips consumer services. RBI’s target is CPI, not WPI.

2. B

   2 only

   2 only. Under-counts the food-weight fact.

3. C

   3 only

   3 only. The false limb — Urjit Patel / 2016: CPI is the target.

4. D

   1, 2 and 3

   All three. Statement 3 fails.

Summary. Official key is (a) 1 and 2 only. CPI is food-heavy and includes services; WPI is at wholesale and omits most services. The RBI’s inflation target is CPI, not WPI.