GDP deflator reveals true inflation in India, challenging traditional price indices.
Inflation in India is tricky to measure due to various price indices like Wholesale Price Index and Consumer Price Indices. The GDP deflator, based on gross domestic product, is another measure. Recent data shows that the GDP deflator moves differently from other price indices over time. This is because of how GDP at current prices is converted to constant prices. The GDP deflator and WPI do not have a long-term relationship, limiting the usefulness of WPI as an inflation measure in India.