Q. With reference Consumer Price Index (CPI) consider the following statements:
1.It tracks the change in retail prices of goods and services which households purchase for their daily consumption.
2.The change in the price index over a period of time is referred to as CPI-based inflation or retail inflation.
3.CPI is dominated by the manufactured goods.
Which of the statements given above are correct?

[A] 1 and 3 only

[B] 2 and 3 only

[C] 1 and 2 only

[D] 1, 2 and 3

Answer: C
Notes:

Consumer Price Index (CPI) tracks the change in retail prices of goods and services which households purchase for their daily consumption. The change in the price index over a period of time is referred to as CPI-based inflation or retail inflation.

If there is inflation the CPI will rise over a period of time. If the CPI drops, that means there is deflation, or a steady reduction in the prices of goods and services.

CPI is dominated by the prices of food articles whereas WPI is dominated by the manufactured goods.

Source: https://timesofindia.indiatimes.com/business/india-business/retail-inflation-rises-to-7-in-august-as-against-6-71-in-july/articleshow/94154661.cms