UPSC Prelims Practice Questions — Retail inflation at 3-month high of 1.33% in December

Q1. The inflation target of 4% (with a tolerance band of +/- 2%), which the Central Government determines in consultation with the RBI once every five years, is provided for under which one of the following provisions of the RBI Act, 1934?

  • A. Section 45ZA
  • B. Section 45ZB
  • C. Section 45ZC
  • D. Section 45U

Q2. In India, the decision on the policy repo rate required to achieve the notified inflation target is taken by which one of the following?

  • A. The Monetary Policy Committee
  • B. The Central Board of Directors of the RBI
  • C. The Financial Stability and Development Council
  • D. The Department of Economic Affairs, Ministry of Finance

Q3. The Consumer Price Index (Combined) that the RBI uses as the reference for its inflation target is compiled and released by which one of the following?

  • A. The National Statistical Office under the Ministry of Statistics and Programme Implementation
  • B. The Office of the Economic Adviser, Ministry of Commerce and Industry
  • C. The Department of Economic Affairs, Ministry of Finance
  • D. The Monetary Policy Department of the Reserve Bank of India

Q4. The retail inflation reading of 1.33% for December 2025, described as a three-month high, was based on which one of the following price indices?

  • A. The Consumer Price Index (Combined), base 2012 = 100
  • B. The Wholesale Price Index, base 2011-12 = 100
  • C. The Consumer Price Index for Industrial Workers, base 2016 = 100
  • D. The GDP deflator

Q5. The Wholesale Price Index (WPI), whose inflation rose to 0.83% in December 2025, is constructed by combining how many major commodity groups?

  • A. Three
  • B. Two
  • C. Five
  • D. Six

Q6. The recommendation to adopt CPI-based inflation, in place of the WPI, as the nominal anchor for India's monetary policy is principally attributed to which one of the following committees?

  • A. The Expert Committee to Revise and Strengthen the Monetary Policy Framework (Urjit Patel Committee, 2014)
  • B. The C. Rangarajan Committee
  • C. The Y. V. Reddy Committee
  • D. The Bimal Jalan Committee