What is Inflation (CPI)?
Inflation measures the rate at which prices of goods and services rise over time, eroding purchasing power — tracked by the Consumer Price Index (CPI) in India.
Formula
Inflation Rate = (CPI_current - CPI_previous) ÷ CPI_previous × 100
How to Interpret
Moderate inflation (2-6%) is healthy. High inflation erodes real returns and forces central banks to raise rates, which hurts stock valuations.
Typical Ranges
RBI target: 4% ± 2%. Above 6% triggers policy tightening.