Construction of consumer price index number. Compute the consumer price index (CPI = ΣWR/ΣW) from the following data:
| Item | Weight in % (W) | Base period price (Rs) | Current period price (Rs) | R = P₁/P₀ × 100 (in %) | WR |
|---|---|---|---|---|---|
| Food | 35 | 150 | 145 | 96.67 | 3883.45 |
| Fuel | 10 | 25 | 23 | 92.00 | 920.00 |
| Cloth | 20 | 75 | 65 | 86.67 | 1733.40 |
| Rent | 15 | 30 | 30 | 100.00 | 1500.00 |
| Misc. | 20 | 40 | 45 | 112.50 | 2250.00 |
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Concept understanding — Weighted Price Relative Index
Weighted Price Relative Index – A First Look
Imagine you're tracking how the cost of your monthly shopping changes. You buy 10 kg of rice, 2 litres of oil, and 1 kg of sugar. If rice becomes 20% more expensive but oil drops by 5%, can you just average those percentages? No — because rice matters more to your budget than oil. The weighted price relative index is the tool that handles this.
The everyday intuition
A price relative is simply the ratio of a current price to a base-period price, usually expressed as a percentage. For rice, if it was ₹40/kg last year and is ₹48/kg now, the price relative is or 120%. That tells you rice costs 20% more. …
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