New Delhi9 minutes ago
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Wholesale inflation has come down to 1.89% in the month of November. Earlier in October, wholesale inflation was at 2.36%. Whereas in the month of September, wholesale inflation was at 1.84%. Inflation has come down due to falling prices of vegetables and food items.
Prices of food items and primary articles decreased
- Inflation rate of daily essential goods decreased from 8.09% to 5.49%.
- Inflation of food items increased from 11.59% to 8.92%.
- The wholesale inflation rate of fuel and power declined from -5.79% to -5.83%.
- Wholesale inflation rate of manufacturing products increased from 1.50% to 2.00%.
Impact of WPI on 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.
Wholesale inflation has three parts:
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
How is inflation measured?
There are two types of inflation in India. One is retail, i.e. 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.
