Some Important Index Numbers
Consumer price index (CPI) or Cost of living Index (CLI)
An index of changes in the prices of commodities and services commonly used by a homogeneous group of people, such as families of industrial workers, or families of agriculturists, etc.is referred to as CPI or CLI.
The major items of consumption that are considered for the construction of CLI are:
- Fuel and Light
- House rent
In India three CPI's are constructed. They are CPI for industrial workers, CPI for urban non manual employees, and CPI for agricultural labourers. They are routinely calculated every month to analyse the impact of changes in the retail price on the cost of living of these three broad categories of consumers.
Wholesale price index
This index measures the mean of the changes in wholesale prices of goods and services. It explains the changes in market economy, be it decline or growth. In India, WPI is the most popular price index used in the business industry and policy market. Usually the change of prices of 26 groups of selected goods are taken to determine the Wholesale Price Index. However, the United States government uses a producer price index instead.
Producer Price Index
It measures average changes in selling prices of commodities received by domestic producers. To compute this index, the mean of all the changes over a year is usually taken. The Producer Price Index concentrates on the area of industry based production and stage of processing based companies. It keeps track of the prices of foods, metals, oil and gases, and many other commodities except the price of services. Producer Price Index for an industry computes the mean of all changes in the prices that have been received by selling the outputs. It arranges the products by using material composition. It regroups the products according to the interest of buyers.
Industrial production index
IPI is an indicator that shows the production output from industrial activities, such as mining, manufacturing and utilities. It is released by the Federal Reserve Board each month. The Industrial Production Index (IPI) is an economic indicator which measures real production output. It is expressed as a percentage of real output with base year currently at 2002. Production indexes are computed with the weights based on annual estimates of value added. This index, along with other industrial indexes, accounts for the bulk of the variation in national output over the duration of the business cycle.
Index number of agricultural production
This index shows agricultural production for each year relative to the base period 1999-2001. It includes all crops except fodder crops.
World Development Indicators (WDI) is the World Bank's premier annual compilation of data about development. The WDI in 2008 included more than 800 indicators from153 economies with populations of more than 1 million, organized in 6 sections namely World View, People, Environment, Economy, States and Markets, and Global Links.
Bombay Stock Exchange
Bombay Stock Exchange is the oldest stock exchange in Asia with a rich heritage.
BSE provides an efficient and transparent market for trading in equity, debt instruments and derivatives. It has a nation-wide reach with a presence in more than 359 cities and towns of India. BSE has always been at par with the international standards. The systems and processes are designed to safeguard market integrity and enhance transparency in operations. Till the eighties, there was no scale to accurately measure the various ups and downs in the Indian stock market. In 1986, BSE came out with a SENSEX which consequently became the yardstick of the Indian stock market. BSE has continuously been increasing the range of its indices. BSE-500 Index and 5 sectoral indices were launched in 1999. In 2001, BSE launched BSE-PSU Index, DOLLEX-30 and the country's first free-float based index - the BSE TECk Index. Over the years, BSE shifted all its indices to the free-float methodology (except BSE-PSU index). BSE disseminates information on the Price-Earnings Ratio, the Price to Book Value Ratio and the Dividend Yield Percentage on day-to-day basis of all its major indices.
Sensex is the short form of Sensitive Index. The value of the sensex is with reference to 1978-79 as the base period. It is the yardstick index for the Indian stock market. It consists of 30 stocks which represent 13 sectors of the economy and the companies listed are leaders in their respective fields. If the Sensex rises, it indicates that the market is doing well and investors expect better earnings from the companies. It also indicates a growing confidence of investors in the soundness of the economy.