Retail inflation measures the change in prices of goods and services consumed by households, directly impacting the cost of living. It's a critical economic...
Retail inflation, also known as consumer inflation, measures the rate at which the prices of a basket of consumer goods and services bought by households increase or decrease over time.
It is typically measured using a Consumer Price Index (CPI), which tracks the average change in prices paid by urban consumers for a market basket of consumer goods and services.
Common causes include demand-pull (high consumer demand), cost-push (rising production costs like fuel or raw materials), supply chain disruptions, and global economic factors.
It reduces the purchasing power of money, meaning consumers can buy fewer goods and services with the same income, thereby increasing the cost of living and potentially eroding savings.
Retail inflation (CPI) tracks prices at the consumer level, reflecting what households pay, while wholesale inflation (WPI) tracks prices at the producer or wholesale level before goods reach consumers.