Consider the following statements : 1. The weightage of food in Consumer Price Index (CPI) is higher than that in Wholesale Price Index (WPI). 2. The WPI does not capture changes in the prices of services, which CPI does. 3. Reserve Bank of India has now adopted WPI as its key measure of inflation and to decide on changing the key policy rates. Which of the statements given above is/are correct ?

Statements 1 and 2 are correct because food items have a significantly higher weightage in the CPI basket (approx. 46%) compared to WPI (approx. 24%), and WPI exclusively tracks goods while CPI includes both goods and services. Statement 3 is incorrect because the RBI shifted its inflation-targeting anchor from WPI to CPI (Combined) in 2014 following the Urjit Patel Committee recommendations, which makes option (d) the most common incorrect choice. The core concept tested is the structural composition and policy application of India’s primary inflation indices.