ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Consumer Price Index (CPI) or Cost of Living Index Number: Construction of Consumer Price Index|Difficulties and Uses of Consumer Price Index-GeeksforGeeks.

Detailed explanation-2: -The RPI includes an element of housing costs, whereas the following items are not included in the CPI: Council tax, mortgage interest payments, house depreciation, buildings insurance, ground rent, solar PV feed in tariffs and other house purchase cost such as estate agents’ and conveyancing fees.

Detailed explanation-3: -The Retail Price Index (RPI) is an older measurement of inflation that is still published because it is used to calculate cost of living and wage escalation; however, it is not considered an official inflation rate by the government.

Detailed explanation-4: -The Consumer Price Index or CPI or market basket is an index used to calculate the retail inflation in the country. It is one of the important tools to evaluate inflation and deflation.

Detailed explanation-5: -The CPI mostly uses a geometric mean to aggregate price changes, whereas in the RPI an arithmetic mean is used. The former is better-suited to accounting for the effect of substitution between goods and services when relative prices change.