Inflation MCQ - Practice Questions with Answers

Both statements are incorrect. Statement 1: the WPI is released by the Office of the Economic Adviser under DPIIT (Ministry of Commerce and Industry), not MoSPI; MoSPI compiles the CPI. Statement 2: the divergence occurred because WPI gives a higher weight to fuel and manufactured products (more exposed to global commodity shocks), while CPI carries a larger weight for food and services.

In India, retail food inflation is measured by the Consumer Food Price Index (CFPI), which stood at 5.32% in June 2026, up from 4.78% in May. The overall Consumer Price Index (CPI) captures general retail inflation, while the Wholesale Price Index (WPI) measures inflation at the wholesale level and the Index of Industrial Production (IIP) tracks industrial output, not prices. Hence, the correct answer is the Consumer Food Price Index (CFPI).

WPI inflation rose to a 42-month high of 8.3 percent in April 2026, up from 3.9 percent in March 2026. The 3.48 percent figure is the retail CPI inflation, and 24.71 percent is the Fuel and Power group inflation.

Statement 1 is correct: retail inflation measured by the CPI rose to 4.38% in June 2026 from 3.93% in May, crossing the RBI's median target of 4% (while remaining within the 2-6% band). Statement 2 is incorrect: rural CPI inflation (4.74%) was higher than urban CPI inflation (3.92%), not the other way around. Hence, only statement 1 is correct.

Both statements are correct. In April 2026, WPI inflation surged to a 42-month high of 8.3 percent led by a sharp rise in fuel and power prices, while retail CPI inflation stayed moderate at 3.48 percent, reflecting a divergence between wholesale and retail price trends.