What is the weightage given to different constituents in the calculation of inflation(indian economy)?

Question

like if inflation is 11.63% then what was the weightage given to wheat o clothing or any other article.

Answer 1

India's annual inflation rate further jumped to 11.42 per cent in mid-June.

This is the highest inflation has gone in more than 13 years. It touched a 13-year high of 11.05% for the week ended June 7.

Inflation data showing the wholesale price index rose to 11.42 per cent in 12 months till the week that ended on June 14, which only worsened sentiments. According to analysts the central bank could follow up two rate increases this month with more policy tightening.

The Formula for Calculating Inflation

The formula for calculating the Inflation Rate using the Consumer Price Index is relatively simple. Every month the Bureau of Labor Statistics (BLS) surveys prices and generates the current Consumer Price Index (CPI).  Let us assume for the sake of simplicity that the index consists of one item and that one item cost $1.00 in 1984. The BLS published the index in 1984 at 100. If today that same item costs $1.85 the index would stand at 185.0

By looking at the above example, common sense would tell us that the index increased (it went from 100 to 185).  The question is how much has it increased? To calculate the change we would take the second number (185) and subtract the first number (100). The result would be 85.  So we know that since 1984 prices increased (Inflated) by 85 points.

What good does knowing that it moved 85 do? Not much. We still need a method of comparison.

Since we know the increase in the Consumer Price Index we still need to compare it to something, so we compare it to the price it started at (100). We do that by dividing the increase by the first price or 85/100. the result is (.85). This number is still not very useful so we convert it into a percent. To do that we multiply by 100 and add a % symbol.

So the result is an 85% increase in prices since 1984. That is interesting but (other than being the date of George Orwell's famous novel) to most people today 1984 is not particularly significant.

calculating a specific Inflation Rate

Normally, we want to know how much prices have increased since last year, or since we bought our house, or perhaps how much prices will increase by the time we retire or our kids go to college.

Fortunately, The method of calculating Inflation is the same, no matter what time period we desire. We just substitute a different value for the first one. So if we want to know how much prices have increased over the last 12 months (the commonly published inflation rate number) we would subtract last year's index from the current index and divide by last year's number and multiply the result by 100 and add a % sign.