What is meant by consumer price index and how cpi to be arrived??
From India, Coimbatore
Acknowledge(0)
Amend(0)
From India, Coimbatore
Acknowledge(0)Amend(0)
Understanding the Consumer Price Index (CPI)
A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. The CPI is calculated by taking price changes for each item in the predetermined basket of goods and averaging them; the goods are weighted according to their importance. Changes in CPI are used to assess price changes associated with the cost of living.
RBI releases the CPI index every month. Visit the RBI site for details.
From India, Lucknow
Acknowledge(0)Amend(0)
616A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. The CPI is calculated by taking price changes for each item in the predetermined basket of goods and averaging them; the goods are weighted according to their importance. Changes in CPI are used to assess price changes associated with the cost of living.
RBI releases the CPI index every month. Visit the RBI site for details.
From India, Lucknow
Acknowledge(0)Amend(0)
Understanding the Consumer Price Index (CPI)
I shall provide a brief on the Consumer Price Index, its compilation, its necessity, and how it is related to DA (Dearness Allowance), etc. Let's start with DA.
Considering the living cost and all, wage revision is conducted once every five or ten years. However, inflation rises daily, and consequently, the value of money decreases. To compensate for this, waiting for the next wage revision is impractical. This is why DA is introduced.
The devaluation of money can be assessed through the Wholesale Price Index and the All India Consumer Price Index (AICPI), among others. The difference between these two is that the price variation of all commodities is considered for the Wholesale Price Index.
Limitations of the All India Consumer Price Index (AICPI)
- There is a specific consumer, namely the Industrial Worker.
- Some specified goods and services are defined, called a "basket of goods."
- Along with the price variation of commodities, the consumable quantity is also considered.
- Across India, 78 centers are selected to calculate the average.
In India, the All India Consumer Price Index was first recorded in 1960. The percentage of the average price is taken as the Consumer Price Index. Since 1960 is the base year, the CPI was 100 in that year. To calculate the variations thereafter, here's an example:
A family needs 20 kgs of rice, 5 kgs of sugar, and 30 liters of milk monthly. If the price rises from Rs. 20 to Rs. 25 per kg for rice, Rs. 20 to Rs. 30 per kg for sugar, and Rs. 10 to Rs. 13 per liter for milk, the base stage price is 20x20 + 5x20 + 30x10 = 800 (Base points 100). After the price hike, it becomes 20x25 + 5x30 + 30x13 = 1040. The revised point is 1040 / 800 x 100 = 130. Here, the new consumer price index is 130, with a variation of 30 points.
In October 1982, the AICPI was 493, indicating that average prices increased by 4.93 times compared to 1960.
Calculation of Industrial DA
Based on the All India Consumer Price, Industrial DA is paid quarterly, commencing in January, April, July, and October. For January, the AICPI is the average of the previous September, October, and November. Similarly, for April, it is December, January, and February; for July, it is March, April, and May; and for October, it is June, July, and August.
When the money devaluation is fully compensated, it is called full DA neutralization. The formula for full DA neutralization is (Total points - Base points) / Base points (in percentage). The AICPI was introduced in India in 1960 and revised in 1982 and 2001. The AICPI of 2001 x 4.63 gives the AICPI of 1982, and the AICPI of 1982 x 4.93 gives the AICPI of 1960. For DA calculation, the AICPI of 1960 is accepted as the base.
Currently, in India, there are mainly two terms of wage settlements in existence: Wage Settlements of 1.1.1997 and 1.1.2007. The base point on 1.1.1997 is 1708, and on 1.1.2007 is 2884.
Example Calculation of AICPI for July '10
This is equivalent to the average of the previous March, April, and May, recorded as 170, 170, and 172 (Base year 2001). Multiply by 4.63 and round, we get 787, 787, and 796 (Base year 1982). Multiply by 4.93 and round, we get 3880, 3880, and 3924 (Base year 1960). Find the average of these three and round, we get 3895.
DA for 1.1.97 scale: Total points - 3895, Base points - 1708, Total - Base = 2187. % is 2187 / 1708 x 100 = 128.0 (Correct to one decimal).
DA for 1.1.2007 scale: Total points - 3895, Base points - 2884, Total - Base = 1011. % is 1011 / 2884 x 100 = 35.1 (Correct to one decimal).
I shall insert an Excel sheet for IDA calculation w.e.f 1.10.2008. You may extend the rows further as necessary and just enter the three indexes towards the year 2001 in green-colored columns. The results will appear in yellow, and red is used for static information.
Regards,
ABBAS.P.S,
Secretary,
ITI Employees' Association,
ITI Limited, PALAKKAD - 678 623,
KERALA, INDIA.
[Phone Number Removed For Privacy Reasons]
AICPI (base 2001) can be found on the following site: http://labourbureau.nic.in
From India, Bangalore
Acknowledge(1)Amend(0)
I shall provide a brief on the Consumer Price Index, its compilation, its necessity, and how it is related to DA (Dearness Allowance), etc. Let's start with DA.
Considering the living cost and all, wage revision is conducted once every five or ten years. However, inflation rises daily, and consequently, the value of money decreases. To compensate for this, waiting for the next wage revision is impractical. This is why DA is introduced.
The devaluation of money can be assessed through the Wholesale Price Index and the All India Consumer Price Index (AICPI), among others. The difference between these two is that the price variation of all commodities is considered for the Wholesale Price Index.
Limitations of the All India Consumer Price Index (AICPI)
- There is a specific consumer, namely the Industrial Worker.
- Some specified goods and services are defined, called a "basket of goods."
- Along with the price variation of commodities, the consumable quantity is also considered.
- Across India, 78 centers are selected to calculate the average.
In India, the All India Consumer Price Index was first recorded in 1960. The percentage of the average price is taken as the Consumer Price Index. Since 1960 is the base year, the CPI was 100 in that year. To calculate the variations thereafter, here's an example:
A family needs 20 kgs of rice, 5 kgs of sugar, and 30 liters of milk monthly. If the price rises from Rs. 20 to Rs. 25 per kg for rice, Rs. 20 to Rs. 30 per kg for sugar, and Rs. 10 to Rs. 13 per liter for milk, the base stage price is 20x20 + 5x20 + 30x10 = 800 (Base points 100). After the price hike, it becomes 20x25 + 5x30 + 30x13 = 1040. The revised point is 1040 / 800 x 100 = 130. Here, the new consumer price index is 130, with a variation of 30 points.
In October 1982, the AICPI was 493, indicating that average prices increased by 4.93 times compared to 1960.
Calculation of Industrial DA
Based on the All India Consumer Price, Industrial DA is paid quarterly, commencing in January, April, July, and October. For January, the AICPI is the average of the previous September, October, and November. Similarly, for April, it is December, January, and February; for July, it is March, April, and May; and for October, it is June, July, and August.
When the money devaluation is fully compensated, it is called full DA neutralization. The formula for full DA neutralization is (Total points - Base points) / Base points (in percentage). The AICPI was introduced in India in 1960 and revised in 1982 and 2001. The AICPI of 2001 x 4.63 gives the AICPI of 1982, and the AICPI of 1982 x 4.93 gives the AICPI of 1960. For DA calculation, the AICPI of 1960 is accepted as the base.
Currently, in India, there are mainly two terms of wage settlements in existence: Wage Settlements of 1.1.1997 and 1.1.2007. The base point on 1.1.1997 is 1708, and on 1.1.2007 is 2884.
Example Calculation of AICPI for July '10
This is equivalent to the average of the previous March, April, and May, recorded as 170, 170, and 172 (Base year 2001). Multiply by 4.63 and round, we get 787, 787, and 796 (Base year 1982). Multiply by 4.93 and round, we get 3880, 3880, and 3924 (Base year 1960). Find the average of these three and round, we get 3895.
DA for 1.1.97 scale: Total points - 3895, Base points - 1708, Total - Base = 2187. % is 2187 / 1708 x 100 = 128.0 (Correct to one decimal).
DA for 1.1.2007 scale: Total points - 3895, Base points - 2884, Total - Base = 1011. % is 1011 / 2884 x 100 = 35.1 (Correct to one decimal).
I shall insert an Excel sheet for IDA calculation w.e.f 1.10.2008. You may extend the rows further as necessary and just enter the three indexes towards the year 2001 in green-colored columns. The results will appear in yellow, and red is used for static information.
Regards,
ABBAS.P.S,
Secretary,
ITI Employees' Association,
ITI Limited, PALAKKAD - 678 623,
KERALA, INDIA.
[Phone Number Removed For Privacy Reasons]
AICPI (base 2001) can be found on the following site: http://labourbureau.nic.in
From India, Bangalore
Acknowledge(1)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
Safety Index calculation work sheet.pdf
SALARY SHEET CALCULATION.xls