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Headline inflation may have moderated but it appears there

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Headline inflation may have moderated but it appears there [#permalink]

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New post 12 Mar 2013, 07:11
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Headline inflation may have moderated but it appears there is no respite for consumer, in daily life. Inflation in food articles is nearing double digits at 9.7% for the week ended October 4, more than double the 4.6% it had touched in the week ended August 30. There is a huge refuge in data choice as prices of food articles are up as well, 2.5% over this period. The wholesale price index, meanwhile, has dropped from 12.3% to 11% over the period.
Which of the following, if true, could help in explaining this anomaly?

a. The wholesale price of fruits is up nearly 20% for the week ended October 4 over the corresponding week last year.

b. Food articles are given only a low weightage in the wholesale price index.

c. In the case of consumer price index for rural labourers and agricultural workers, food has a high weightage of over 65% in the index.

d. The rising prices is part seasonal and part because of the recent rains that destroyed large quantities of fruits and vegetables.

e. Whatever the rate of inflation, people cannot do without essential food items.
[Reveal] Spoiler: OA
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New post 12 Mar 2013, 07:29
if B : Food articles are given only a low weightage in the wholesale price index. then we may have a situation when Inflation in food articles is nearing double digits at 9.7% but whole sale price index has dropped

what is the source ? reading this line was difficult :There is a huge refuge in data choice as prices of food articles are up as well, 2.5% over this period
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New post 12 Mar 2013, 07:32
[quote="neha24"what is the source ? reading this line was difficult :There is a huge refuge in data choice as prices of food articles are up as well, 2.5% over this period[/quote]

Source - TIME LR series. I encountered the same and so posted this question here to get a good explaination.
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New post 12 Mar 2013, 07:51
i am not sure what time LR series is but i feel that i feel B is pretty satisfactory in explaining the noted fact .
also i find that D is written in a very non gmat way:The rising prices is part seasonal and part because of

as for B ; if some parameter has less of a contribution into some index then we will get a scope to explain as why that index will be rising is showing good trend (i am not going into the details ) when the some of its parameter are showing a negative trends
take an example of weighted average : in a group of boys the average weight will get less affected if some light weighted boys are moved into or outside of the group than when some heavy weighted boys are moved in or out .this is coz weighted affect of heavy weighted boys is considerably more
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Re: Headline inflation may have moderated but it appears there [#permalink]

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New post 20 Aug 2016, 07:05
What is wrong in (C)?

I thought it should be either (B) or (C) and chose (C). My reasoning - (C) mentioned 65% but in (B) low could be mean anything <50 %.

(C) looks stronger to me. Please help!
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Headline inflation may have moderated but it appears there [#permalink]

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New post 20 Aug 2016, 09:44
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manhasnoname wrote:
What is wrong in (C)?

I thought it should be either (B) or (C) and chose (C). My reasoning - (C) mentioned 65% but in (B) low could be mean anything <50 %.

(C) looks stronger to me. Please help!


C talks about consumer price index and that too for a specific audience which may or may not have an overall impact.

We are not sure if consumer price index for rural labourers and agricultural workers plays a major role in the WPI. + No information on Consumer price index is being told in the argument.

Argument simply states that despite an increase in Food Prices, WPI has decreased. It may happen that Food prices are a very small portion in the overall WPI. Hence, B
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Headline inflation may have moderated but it appears there   [#permalink] 20 Aug 2016, 09:44
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