Passage

A single number for inflation is an aggregate across different commodities and services – the price rise differs for different items of consumption. So, the single number is arrived at by assigning weights to different commodities and services. For WPI, the weights in production are used; for CPI, the consumption basket is used. But people are not homogeneous. The consumption basket is vastly different for the poor, the middle classes, and the rich. Hence, the CPI is different for each of these classes and a composite index requires averaging the baskets.

QUESTION

CSAT

Easy

Comprehension

Prelims 2025

Which one of the following statements best reflects the most logical, rational, and crucial message conveyed by the passage?

Select an option to attempt

Explanation

Option A is incorrect: The passage does not advocate replacing CPI with WPI. It explains that both indices serve different purposes — WPI uses production weights while CPI uses consumption weights. The focus is on variability of price rise across groups, not on discarding an index.

Option B is correct: The passage emphasizes that “the price rise differs for different items of consumption” and that “the consumption basket is vastly different for the poor, the middle classes, and the rich.”
This shows that a single inflation figure fails to accurately represent individual or group-specific price changes. Therefore, the current method of calculating inflation does not fully capture the true variation in price rise across different items and consumer categories.

Option C is incorrect: The passage mentions both commodities and services but does not claim that services are underrepresented. The focus is on heterogeneity of consumption, not on sectoral underrepresentation.

Option D is incorrect: The author never suggests that inflation data is useless. The discussion is about its complexity and the need for more inclusive representation, not about its irrelevance.

Hence, the correct answer is B.

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