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Wholesale inflation (WPI) has increased to 0.83% in December. This is the high level of 8 months. Inflation has increased due to food items becoming expensive. Earlier in November it was at minus 0.32%. Whereas in October it had come down to minus 1.21%. Commerce Ministry has released wholesale inflation figures today i.e. on 14th December.
Daily essential items and food items became expensive
- Inflation of daily essential goods (primary articles) increased from minus 2.93% to 0.21%.
- Inflation of food items (food index) increased from minus 2.60% to 0%.
- The wholesale inflation rate of fuel and power declined from minus 2.27% to minus 2.31%.
- Wholesale inflation rate of manufacturing products increased from 1.33% to 1.82%.
Three parts of wholesale inflation Primary article, whose weightage is 22.62%. The weightage of Fuel and Power is 13.15% and the weightage of Manufactured Products is the highest at 64.23%. The primary article also has four parts.
- Food articles like grains, wheat, vegetables
- Oil seeds are included in non-food articles.
- Minerals
- crude petroleum
Retail inflation increased to 1.33% in November In December, retail inflation has increased to the level of 1.33% as compared to the previous month. This is the high level of three months. Earlier in November it was at 0.71%. Whereas in October it was at 0.25%, which was the lowest level in 14 years.
Impact of Wholesale Price Index (WPI) on the common man Prolonged increase in wholesale inflation has a negative impact on most productive sectors. If wholesale prices remain high for too long, producers pass the burden on to consumers. Government can control WPI only through tax.
For example, in the situation of sharp increase in crude oil, the government had reduced the excise duty on fuel. However, the government can reduce tax cuts only within a limit. In WPI, more weightage is given to factory related goods like metal, chemical, plastic, rubber.
How is inflation measured? There are two types of inflation in India. One is retail and the other is wholesale inflation. Retail inflation rate is based on the prices paid by ordinary consumers. It is also called Consumer Price Index (CPI). Whereas, Wholesale Price Index (WPI) means the prices that one trader charges from another trader in the wholesale market.
Different items are included to measure inflation. For example, the share of manufactured products in wholesale inflation is 63.75%, primary articles like food 22.62% and fuel and power 13.15%. At the same time, the share of food and products in retail inflation is 45.86%, housing is 10.07% and other items including fuel also have a share.
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