Retail Inflation Jumps to 7.79% in April, Which is Highest in 8 Years

Current Context: India's retail inflation took a sudden turn and jumps to 7.79 percent in April, which was mainly caused due to high oil and food prices.

• This is the fourth consecutive month where CPI figures stood above RBI upper tolerance limit.
• The previous record stood at 8.33 percent in May 2014.
• Inflation in the food basket rose to 8.38 percent in April if we compared to the previous month which recorded as 7.68% in March.
• The core inflation also drastically increases from 6.6% in March to 6.8% in April.
• If we consider the same factor In the oils and fats category, inflation stood at a high level of 17.28% in April as Ukraine is one of the major sunflower oil producers in the world, mostly India imports a major portion the commodity from Ukraine.
• Secondly, it also impacted on prices of fertilizers as Ukraine is also a key supplier of fertilizer to India.
• Now many experts believed that RBI will hike the policy rate by 25 bps in order to control this situation, as the next monetary policy committee meeting is scheduled on June 6-8.
• Static Part
• About Inflation:
• The CPI tracks the change in retail prices of products and services which households purchase for their daily consumption.
• To measure inflation, we estimate what quantity CPI has increased in terms of percentage change over the identical period of the previous year.
• If prices have fallen, it's called deflation (negative inflation). The financial organization (RBI) pays very close attention to the current figure in its role of maintaining price stability within the economy.
• The CPI closely monitors retail prices at a specific level for a specific commodity; the price movement of products and services at rural, urban, and all-India levels.
• The change within the price level over a period of your time is observed as CPI-based inflation or retail inflation.
• Generally, CPI is employed as a macroeconomic indicator of inflation, as a tool by the financial institution and government for inflation targeting and for inspecting price stability, and as a deflator within the national accounts.
• Reserve Bank Of India:
• The Reserve Bank of India was established on April 1, 1935,  under the Reserve Bank of India Act, 1934.
• Present Governor: Shri Shaktikanta Das

Question: 

Q.1 Which of the following can be calculated by using the consumer price index (CPI)?
a. Price of services only
b. Price of goods only
c. Price of both goods and services
d. None of the above