Inflation and economic growth in the Indian economy

To have an idea about the trend of wholesale price index number and the rate of inflation during the period from 1981–82 to 2011–12, this research work uses the various price index numbers which are deflated to the base year 2004–05 and their growth in various decades is analysed. For this purpose, wholesale price index number of all commodities, price index number of primary articles, food articles, Non-food articles, fuel and power and manufactured products have been taken. Further, to know about the annual growth rate of inflation in these groups of price index numbers, growth rates have also been worked out for the three periods, namely, 1981–81 to 1990–91, 1991–92 to 2000–01 and 2001–02 to 2011–12. To know the annual average increase in these price index numbers, simple linear trend line is fitted for all the price index numbers in these three periods. Finally to analyse the relationship between GDP (national income) and wholesale price index numbers (inflation), simple linear regression is used and the results are interpreted.