UPSC Prelims Practice Questions — PRESS RELEASE OF CONSUMER PRICE INDEX ON BASE 2024=100 FOR SEPTEMBER, 2026

Q1. With reference to India's flexible inflation targeting framework under the Reserve Bank of India Act, 1934, consider the following statements: Which of the statements given above is/are correct?

  1. The inflation target is fixed by the Monetary Policy Committee itself for a period of five years.
  2. The Monetary Policy Committee determines the policy rate required to achieve the inflation target.
  3. When the target is missed as defined under the framework, the RBI must report the reasons and the proposed remedial actions to the Central Government.
  • A. 1 and 2 only
  • B. 1 and 3 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q2. Suppose that under India's flexible inflation targeting framework, quarterly average inflation based on the all-India Combined CPI is 6.4%, 6.2% and 5.8% in three successive quarters, while Rural CPI inflation stays above 6% in all three quarters. Which one of the following correctly describes the position under the framework?

  • A. No failure has occurred, because the band applies to the annual average of Combined CPI inflation, not quarterly data.
  • B. No failure has occurred, because the target measure stayed above the upper limit for only two successive quarters.
  • C. A failure has occurred, because Rural CPI inflation stayed above the upper limit for three successive quarters.
  • D. A failure has occurred, because the three-quarter average of Combined CPI inflation exceeds the upper limit.

Q3. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. India's statutory inflation target is framed in terms of headline CPI inflation rather than a core measure that excludes food and fuel.
  2. Food and fuel together account for less than a quarter of the Indian household consumption basket, so including them hardly changes measured inflation.
  • A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • C. Statement-I is correct, but Statement-II is incorrect
  • D. Statement-I is incorrect, but Statement-II is correct

Q4. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. The weight of food and beverages in India's CPI on base 2024=100 is lower than in the earlier series on base 2012=100.
  2. As household incomes rise, the share of total consumption spending going to food tends to fall, even when spending on food rises in absolute terms.
  • A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • C. Statement-I is correct, but Statement-II is incorrect
  • D. Statement-I is incorrect, but Statement-II is correct

Q5. With reference to price indices used in India, consider the following statements: Which of the statements given above is/are correct?

  1. The Wholesale Price Index tracks prices at the wholesale or producer stage and does not include services, whereas the CPI does include services.
  2. Dearness allowance of government employees is indexed to the CPI for Industrial Workers rather than to the all-India Combined CPI.
  3. A sustained rise in house rents would be captured by the CPI but would not be reflected in the Wholesale Price Index.
  • A. 1, 2 and 3
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1 and 2 only

Q6. India's CPI on base 2024=100 assigns a smaller weight to food and beverages and a larger weight to services than the earlier series. Other things remaining the same, consider the following statements about the likely consequences of this change: Which of the statements given above is/are correct?

  1. A given percentage rise in vegetable prices will add less to headline CPI inflation than it would have under the earlier weights.
  2. Headline CPI inflation will respond more strongly to changes in charges for rent, transport and communication services.
  3. For the same set of food price changes, the Consumer Food Price Index inflation reading will be lower simply because food carries a smaller weight in the overall basket.
  • A. 2 only
  • B. 1 and 3 only
  • C. 1, 2 and 3
  • D. 1 and 2 only

Q7. When India's CPI was rebased from 2012=100 to 2024=100, the two series were joined using linking factors computed for 2025, a year in which both series were compiled. With reference to such linking, consider the following statements: Which of the statements given above is/are NOT correct?

  1. A linking factor is the ratio of the average index of the new series to that of the old series over the overlap period.
  2. Multiplying an old series by a constant linking factor rescales its index levels but leaves its year-on-year inflation rates unchanged.
  3. The two series can be linked directly not only at the general index level but also at every item and sub-group level.
  • A. 2 and 3 only
  • B. 1 and 3 only
  • C. 3 only
  • D. 1 only