Inflation Data shows a steady decline in general prices : pic.twitter.com\/HolLLXOSur<\/a><\/p>\n — Ministry of Finance (@FinMinIndia) December 5, 2017<\/a><\/p><\/blockquote>\n The rate of inflation represents the general rate of increase in the average prices of goods and services over a period of time. A falling inflation rate means that the rate of increase in average prices has slowed down. It does not mean that prices of goods and services have fallen. Average prices are still going up, albeit the rate of increase is lower than the previous period. The ministry in its tweet has confused the falling rate of inflation with decline in prices or deflation<\/p>\n This faux pas did not go entirely unnoticed and was called out by many on Twitter who responded by giving the Finance Ministry account a lesson in economics. <\/p>\n Vivek Kaul who is the author of the ‘Easy Money’ trilogy tweeted:<\/p>\n The ministry of finance clearly does not understand the definition of inflation. The difference between falling prices and the fall in rate of price rise. Two very distinct things. https:\/\/t.co\/ycDfcK3UMr<\/a><\/p>\n — Vivek (@kaul_vivek) December 6, 2017<\/a><\/p><\/blockquote>\n Stanley Pignal who is the Mumbai correspondent for the ‘The Economist’ tweeted:<\/p>\n FYI if the blue bars are *above* the x-axis, it means general prices are increasing. So a "steady decline in general prices" this is not. https:\/\/t.co\/QuwMAcetgs<\/a><\/p>\n — Stanley Pignal (@spignal) December 6, 2017<\/a><\/p><\/blockquote>\n Another Twitter user, Nitin Pande, who is the Director of Innorenovte Solutions Pvt. Ltd., tweeted:<\/p>\n Inflation is rate of increase and it coming down does not mean that prices are coming down. It simply means that rate with which prices are increasing is coming down. Prices are still rising.<\/p>\n — Nitin Pande (@nitinpande1305) December 5, 2017<\/a><\/p><\/blockquote>\n In India, inflation was calculated by RBI using the Wholesale Price Index (WPI) till 2014, after which a shift was made<\/a> to Consumer Price Index (CPI). The CPI is the price of a representative basket of goods and services at the retail level that a household acquires for consumption. The items are assigned weights that are indicative of relative importance of the groups and sub-groups under which these goods and services are categorised. The CPI data is released on a monthly basis<\/a> by The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation. <\/p>\n Here is the Consumer Price Index chart since 2013 showing an increase in CPI over the years.<\/p>\n The data on the rate of inflation shared by the ministry shows that the rate of increase in prices is slowing down. As long as the inflation rate is positive, it is indicative of an increase in prices. A decline in prices will lead to a negative rate of increase or what is known as deflation.<\/p>\nWhat is inflation?<\/h3>\n
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