CPI EXPLAINED: How the Consumer Price Index Measures Inflation (Plus India's June 2025's HUGE Drop)

Описание: The Consumer Price Index (CPI) is a key measure of economic and social policy-making, constructed to measure changes over time in the general level of prices of consumer goods and services that households acquire, use, or pay for consumption. This index is often used to adjust wages, social security, and other benefits, and serves as a vital macroeconomic indicator of price inflation for the household sector.
The CPI Manual: Theory and Practice provides comprehensive guidelines for compiling the CPI and explains the underlying economic and statistical concepts used, such as different index formulae (Lowe, Laspeyres, Paasche, Hedonics, etc.). The CPI measures the rate at which the prices of consumer goods and services are changing over time. It is calculated as a weighted average of the price changes for a specified basket of consumer products.
Key Findings from the June 2025 CPI Data (India):
Our video analyzes recent inflation figures, drawing on the latest statistical release:
• Headline Inflation: The Year-on-year inflation rate based on the All India Combined CPI for June 2025 is 2.10% (Provisional). This represents a decline of 72 basis points compared to May 2025 and is the lowest year-on-year inflation recorded after January 2019.
• Food Inflation: Year-on-year inflation based on the All India Consumer Food Price Index (CFPI) for June 2025 is -1.06% (Provisional). This food inflation rate is the lowest observed since January 2019. The decline is attributed mainly to a favorable base effect and lower inflation rates for specific sub-groups, including Vegetables, Pulses and Products, Meat and Fish, Cereals and products, Sugar and confectionery, and Milk and products.
• Sectoral Inflation: Inflation in the rural sector experienced a significant decline, with headline inflation dropping to 1.72% (Provisional) in June 2025 (from 2.59% in May 2025).
• Sub-group Inflation: Inflation rates were also reported for key consumption groups, including Health (4.43%), Transport & Communication (3.90%), and Fuel & Light (2.55%).
Learn about:
• The critical role of the CPI in monetary and social policy.
• The complex methodologies used to calculate price indices, distinguishing between the acquisitions, use, or payment approaches to consumption.
• How statisticians deal with factors like quality change, which is one of the greatest challenges facing CPI compilers [1.226, 2330].
• The significance of the recent sharp decline in overall and food prices