There are two types of indicators of inflation :
(i) Index Numbers of Prices : In India, two types of index numbers are prepared. They are :
(A) Wholesale Price Index (WPI)—It measures the change in wholesale prices on weekly basis. On the basis of weekly indices, average an¬nual WPI is worked out.
(B) Consumer Price Index (CPI)—It measures the change in retail prices on monthly basis. On the basis of monthly indices, average annual CPI is worked out. It includes both goods as well as services.
(ii) Gross Domestic Product (GDP) Deflator—It refers to the ratio between GDP at current prices and GDP at constant prices.
GDP Deflator = GDP at Current Prices /GDP at Constant Prices
If ‘GDP at current prices’ = ‘GDP at constant prices’, GDP deflator = 1 It implies no change in price level.