In India, inflation is measured by:

🔑Key Points:
The two main indicators of inflation in India are the wholesale price index (WPI) and the consumer price index (CPI).
Many developing countries use changes in the consumer price index (CPI) as their central measure of inflation.
In India, CPI (combined) is declared as the new standard for measuring inflation (April 2014).
CPI numbers are typically measured monthly, and with a significant lag, making them unsuitable for policy use.
Inflation is the measured surge in the average prices of goods and services over a longer period in the economy.
It is a macro term in which the impact of inflation on a large basket of goods is seen.
As the value of money is decreased, the cumulative impact of inflation is reported as the buying power of money is reduced.
Confusion Points
RBI used WPI for most of its policy decisions before 2014. WPI shows the combined price of a commodity basket comprising 676 items. But WPI does not include services, and it neither reflects the bottlenecks between producer and wholesaler nor between wholesaler and retailer (consumer).
Hence from 2014, as part of the reforms initiated by RBI governor Raghu Ram Rajan, RBI shifted to CPI for policy decisions.

 🛑Important Points:

• Inflation:
A calculated surge in the average prices of goods and services for a longer duration in the economy is called inflation.
It is a macro concept, wherein the effect of inflation is seen over a large basket of goods.
The total effect of inflation is recorded as the value of money is reduced that is the purchasing power of money is reduced.
Creeping, Walking, Galloping and Hyper are types of Inflation.
Creeping Inflation happens when the rate of inflation slowly increases over time.
Creeping Inflation generally ranges from 2% to 4%.
Walking Inflation happens when inflation is in single digits i.e less than 10%.
Walking inflation may simply be referred to as moderate inflation.
Galloping inflation is also known as jumping inflation.
Galloping inflation refers to inflation that proceeds at an exceptionally high.”
Galloping inflation is an inflation rate of between 20% up to 1000%
This is reserved for extreme forms of inflation – usually over 1,000%.