RAS question
CPI stands for:
Correct answer: (B) Consumer Price Index.
CPI stands for Consumer Price Index, the index used to measure changes over time in the prices of goods and services acquired by households for consumption.
Explanation
CPI expands to Consumer Price Index. The MoSPI source describes Consumer Price Indices as measuring changes over time in the general level of prices of goods and services that households acquire for consumption. That matches the exam explanation: CPI tracks the average change in prices paid by consumers for a basket of goods and services. It is therefore a consumer-side price measure, not a wholesale, commodity-only, or production-cost measure. The explanation also notes its policy relevance in India: since 2014, CPI (Combined) has been the primary inflation measure used for monetary policy purposes, replacing WPI for that role.
Why the other options are wrong
- (A) Central Price Index is not the expansion; CPI refers to consumer prices, not a centrally administered price index.
- (C) Commodity Price Index is too narrow because CPI measures prices of goods and services acquired by households for consumption, not commodities alone.
- (D) Cost of Production Index points to producer-side costs, whereas CPI measures prices paid by consumers for a consumption basket.
Concept
This tests the basic inflation-index terminology in Indian Economy. It recurs in RAS because questions on inflation, monetary policy and WPI-CPI comparison depend on knowing what CPI actually measures.