wpi_cpi_sec

7/29/2019 WPI_CPI_SEC

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SEC Classification

The SEC classification, created in 1988, was ratified by Market Research

Society of India (MRSI), is used by most media researchers and brand managers

to understand the Indian consuming class. Originally developed by IMRBInternational as a way of understanding market segments, and consumer

behaviour it was standardized and adopted by the Market Research Society of

India in the mid-1980s as a measure of socio-economic class and is nowcommonly used as a market segmentation tool in India.

The SEC Classification the classification of Indian consumers on the basis of

parameters. Traditionally the two parameters used to categorize consumersOccupation and Education of the chief wage earner (Head) of the households

There are 12 grades in the new system starting from A1 to E3.

The lists of items are:

Electricity connection

Ceiling fan

LPG stove

Two wheeler

Colour TV

Refrigerator

Washing machine

Personal computer

Four wheeler,

Air conditioner and

Agricultural land.

These grids are used to determine the consumption preferences, and purchasing

power of households, and are common tools used by social and business

researchers working in India. The SEC grid does not use family income levels

as a measure as this data is hard to collect and it has been demonstrated that

education levels and occupation criteria in India are better determinants of

consumer preference. The methodology used in these tools differs from

the Household Potential Index, which measures consumption intensity.


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Consumer Price Index (CPI)

Consumer Price Index (CPI)

Consumer Price Index Consumer Price Index measures the average change inprices paid for a fixed market basket of consumer goods and services over a statedperiod of time.

At the national level, there are four Consumer Price Index (CPI) numbers.

CPI for Industrial Workers (IW)

CPI Urban Non-Manual Employees

CPI Agricultural labourers

CPI Rural labour

Broad Groups of (CPI):

Food, Beverages and Tobacco

Fuel & Light Housing

Clothing & Footwear Miscellaneous

Formula for calculating CPI:

Formula for calculating CPI Calculating CPI for single item Calculating CPI for

multiple item

(Cost of CPI market basket at current period prices Cost of CPI market basket atbase years prices) 100.


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Wholesale price index:

Wholesale price index WPI is the index that is used to measure the change in theaverage price level of goods traded in wholesale market. Commodities are groupedinto:-

1. Primary Articles

2. Fuel, Power, Light & Lubricants

3. Manufactured Products

Calculation of WPI & Inflation rate:

Calculation of WPI & Inflation rate Formula for calculating WPI

WPI = Price of current year Price of base year / Price of base year x 100.

Calculation for inflation rate :- (WPI of end of year WPI of beginning of year)/WPI ofbeginning of year x 100

WPI vs CPI

Now as we have seen how inflation is calculated with WPI , its now time to analyze

wthether WPI is a good measure of inflation or not.

Most of the major economies like US, UK, Japan, France, Singapore and even our

arch rival China have selected CPI as its official barometer to weigh its inflation. But

our country, India, is amongst few countries of the world, which selected WPI as its

official scale to measure the inflation in the economy.

The main difference between WPI and CPI is that wholesale price index measures

inflation at each stage of production while consumer price index measures inflation

only at final stage of production.

CPI is a statistical time-series measure of a weighted average of prices of a specified

set of goods and services purchased by consumers. It is a price index that tracks the


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prices of a specified basket of consumer goods and services, providing a measure of

inflation.

CPI is a fixed quantity price index and considered by some a cost of living index.

Under CPI, an index is scaled so that it is equal to 100 at a chosen point in time, so

that all other values of the index are a percentage relative to this one.

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