SUBMITTED BY:

GROUP 6
ASMITA SINHA
POOJA SARAF
PRATYUSH SAHU
RAJDEEP JAISWAL
SUPREET GUPTA
TRISHA KAUSHIK
WHAT IS INFLATION ?
In economics, inflation is a persistent increase in the
general price level of goods and services in
an economy over a period of time. When the general
price level rises, each unit of currency buys fewer
goods and services. Consequently, inflation reflects a
reduction in the purchasing power per unit of money
a loss of real value in the medium of exchange and
unit of account within the economy. A chief measure
of price inflation is the inflation rate, the annualized
percentage change in a general price index over time.
EFFECTS OF INFLATION
POSITIVE EFFECTS
Increase in the
opportunity cost of
holding money
Shortages of goods as
consumers
begin hoarding out of
concern that prices will
increase in the future
NEGATIVE EFFECTS
Ensuring that central
banks can adjust real
interest rates

Encouraging investment
in non-monetary capital
projects
WHAT IS CONSUMER PRICE INDEX
??
A consumer price index (CPI) measures changes in
the price level of a market basket goods and
services purchased by households.
The annual percentage change in a CPI is used as a
measure of inflation.
It can be used to index the real value of wages, salaries,
pensions for regulating prices and for deflating
monetary magnitudes to show changes in real values.

A consumer price index (CPI) in the United
States is defined by the Bureau of Labor
Statistics as "a measure of the average change over
time in the prices paid by urban consumers for
a market basket of consumer goods and services.

The CPI is a statistical estimate constructed using
the prices of a sample of representative items
whose prices are collected periodically

CURRENT MARKET SCENARIO

Current inflation India (CPI India) the inflation is
based upon the Indian consumer price index. The
index is a measure of the average price which
consumers spend on a market-based "basket" of goods
and services. Inflation based upon the consumer price
index (CPI) is the main inflation indicator in most
countries.

We suggest to use the links underneath the current
inflation rate, in case you are interested in more
extensive information on the development of the
current or historic inflation in India.
The Consumer Price Index (CPI-U) is compiled by the
Bureau of Labor Statistics and is based upon a 1982
Base of 100. Therefore, a Consumer Price Index of 158
would indicate 58% inflation since 1982.
The commonly quoted inflation rate of say 3% is
actually the change in the Consumer Price Index from
a year earlier. By looking at the change in the index we
can see that what cost an average of 9.9 cents in 1913
would cost about $1.82 in 2003 and $2.30 in August of
2012.
OBJECTIVES
It is a measure of the cost of living and reflects changes
in the general price level.
The CPI uses a basket of consumer goods to give goods
a weighting. Then price surveys find out how much the
prices have increased.
The CPI excludes housing costs and so tends to give a
lower inflation rate than the old method of calculating
inflation Retail Price Index.

The CPI can be used to report how prices that
households face have changed over time, that is, the
percentage change between different periods for each
class, subgroup, group, or for the overall CPI.


The CPI is used to help set monetary policy. The Policy
Targets Agreement between the Governor of the
Reserve Bank and the Minister of Finance.

What Is Index of industrial
production??

Index of Industrial Production (IIP) is
an index which details out the growth of various
sectors in an economy, e.g. Indian IIP will focus on
sectors like mining, electricity and manufacturing.
Index of Industrial Production (IIP) is an abstract
number, the magnitude of which represents the status
of production in the industrial sector for a given
period of time as compared to a reference period of
time.
The all India IIP is a composite indicator that
measures the short-term changes in the volume of
production of a basket of industrial products during a
given period with respect to that in a chosen base
period.

An industrial production index is an index covering
production in mining, manufacturing and public
utilities (electricity, gas and water), but excluding
construction.
The exact coverage, the weighting system and the
methods of calculation vary from country to country
but the divergences are less important than e.g. in the
case of the price and the wage indices.


CURRENT MARKET SCENARIO
The industry consumes a significant share (around
one-third) of its own production. The industry has a
14% weightage in the overall Index of Industrial
Production (IIP) which gives an indication of its
importance in the countrys industrial growth. A
robust chemical industry ushers in many economic
and strategic benefits for the nation. As on March 31,
2008, the size of the Indian chemical industry was
estimated at around USD 35 bn and 3% of Indias GDP.


Industrial shipments grow at a 3.0% annual rate over
the first 10 years of the projection and then slow to
1.6% annual growth for the rest of the projection. Bulk
chemicals and metals-based durables account for
much of the increased growth in industrial shipments
in AEO2014. Industrial shipments of bulk chemicals,
which benefit from an increased supply of natural gas
liquids, grow by 3.4% per year from 2012 to 2025
in AEO2014, as compared with 1.9% in the Annual
Energy Outlook 2013

OBJECTIVES
To provide precise, reliable information, in the
shortest time possible, on the main structural and
activity characteristics of the different sectors that
comprise the industrial activity of the economy, in
such a way that they may satisfy the national and
international needs for information on the subject.




To measure the monthly evolution of the
production activity of the industrial branches,
excluding construction.

To measure the evolution of the prices of the
industrial products sold in the foreign market,
and of those originating in the rest of the world.


COMPARISION
Index of industrial production (IIP) and the consumer
price index (CPI), it appears that a new principle is in
place. If the news is good, announce it during market
hours. If it is bad, wait until the market is closed.
The IIP and CPI numbers certainly warranted this
caution. Together, they suggest that even as growth is
decelerating, inflation is actually accelerating.
The recent economic data makes things worse. CPI
inflation comes at 11.24% and IIP at -1.8%.

IIP 1.6 per cent relative to May 2012 which were
anticipating a small positive number, the growth in
which slowed to a mere 14.3 per cent during May, still
putting the April-May growth rate at a rather striking
50.6 per cent.

CPI reading is the highest so far, expanding the index
by a marginal %, we see CPI averaging 10.5-11.5% for
the remaining part of the year. Only a flat base keeps
inflation around 9%. There is no base effect either.