The correct answer is Bank rate is decreased.

• The Consumer Price Index (CPI) - It is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.
  • It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.
  • Changes in the CPI are used to assess price changes associated with the cost of living.
  • The CPI is one of the most frequently used statistics for identifying periods of inflation or deflation.
  • If Bank Rate is decreased then CPI increases.

• Inflation - It is the decline of purchasing power of a given currency over time.
  • A quantitative estimate of the rate at which the decline in purchasing power occurs can be reflected in the increase of an average price level of a basket of selected goods and services in an economy over some period of time.
  • The rise in the general level of prices often expressed a percentage means that a unit of currency effectively buys less than it did in prior periods.
• Bank Rate - A bank rate is the interest rate at which a nation's central bank lends money to domestic banks, often in the form of very short-term loans.
  • Managing the bank rate is a method by which central banks affect economic activity.