UPSC Prelims Practice Questions — Retail inflation climbs past RBI target to 4.4%

Q1. Under India's flexible inflation targeting framework, which one of the following assists the Monetary Policy Committee in the formulation of monetary policy?

  • A. Monetary Policy Department of the Reserve Bank of India
  • B. Department of Economic Affairs, Ministry of Finance
  • C. Department of Economic and Policy Research, Reserve Bank of India
  • D. Financial Markets Regulation Department, Reserve Bank of India

Q2. Under the inflation target notified in terms of Section 45ZA of the Reserve Bank of India Act, 1934, the highest rate of CPI inflation that still lies within the tolerance band is:

  • A. 5 per cent
  • B. 6 per cent
  • C. 6.5 per cent
  • D. 7 per cent

Q3. As per the National Statistical Office release of the Consumer Price Index (base 2024=100) for June 2026, which one of the following recorded the highest year-on-year inflation rate at the all-India (combined) level?

  • A. Headline Consumer Price Index
  • B. Consumer Food Price Index
  • C. Housing
  • D. Transport

Q4. The day-to-day liquidity management operations that keep the operating target of monetary policy, the Weighted Average Call Rate, aligned with the policy repo rate are reviewed by which one of the following?

  • A. Financial Market Committee of the Reserve Bank of India
  • B. Monetary Policy Committee
  • C. Financial Stability and Development Council
  • D. Monetary Policy Department of the Reserve Bank of India

Q5. In the Consumer Price Index series with base 2024=100, the Consumer Food Price Index (CFPI) is best described as:

  • A. the weighted average of the indices of all twelve sub-groups of the 'Food and Beverages' group
  • B. the weighted average of the indices of ten of the twelve sub-groups of 'Food and Beverages', excluding 'non-alcoholic beverages' and 'prepared meals, snacks, sweets etc.'
  • C. the index of food items priced in rural markets only, used to compute rural food inflation
  • D. the combined index of food and fuel items, which together constitute the non-core component of the CPI

Q6. In the Consumer Price Index series on base 2024=100, compiled with weights drawn from the Household Consumption Expenditure Survey 2023-24, which one of the following divisions carries the largest weight?

  • A. Food and beverages
  • B. Housing
  • C. Transport
  • D. Health

Q7. The 2026 forecast lowering south-west monsoon rainfall to 90 per cent of the Long Period Average — a key upside risk to food inflation flagged by the Reserve Bank — was issued by which one of the following?

  • A. India Meteorological Department
  • B. Indian Institute of Tropical Meteorology, Pune
  • C. National Centre for Medium Range Weather Forecasting
  • D. National Remote Sensing Centre