Wholesale inflation increased to 2.36% in the month of October. At the start of September, wholesale inflation was 1.84%. In August, it returned to 1.31%. Inflation has increased due to rising prices of vegetables and food items.
Prices of food and primary products have increased
The inflation rate of daily essential goods increased from 6.59% to 8.09%. Food inflation increased from 9.47% to 11.59%. The wholesale inflation rate for fuels and electricity decreased from -4.05% to -5.79%. from 1% to 1.50%.
Impact of WPI on the common man: Due to prolonged increase in wholesale inflation, it has a negative impact on most of the productive sectors. If wholesale prices remain high for too long, producers pass the burden on to consumers. The government can only control WPI through taxes.
For example, in response to the sharp increase in the price of crude oil, the government reduced excise duties on fuel. However, the government can only reduce tax cuts up to a certain limit. In WPI, more importance is given to plant related products like metal, chemicals, plastic and rubber.
Wholesale inflation has three parts: Primary item whose weight is 22.62%. The weighting of fuel and electricity is 13.15% and that of manufactured products is the highest at 64.23%. The main article also has four parts:
Food items like grains, wheat, vegetables, non-food items include oilseeds, minerals and crude oil.
How do we measure inflation? There are two types of inflation in India. One is retail, that is, retail, and the other is wholesale inflation. The retail inflation rate is based on prices paid by ordinary consumers. It is also called the Consumer Price Index (CPI). At the same time, the Wholesale Price Index (WPI) refers to the prices that one businessman charges another businessman in the wholesale market.
Different elements are included to measure inflation. For example, the share of manufactured products in wholesale inflation is 63.75%, that of primary products like food 22.62% and that of fuel and electricity 13.15%. At the same time, the share of food and products in retail inflation is 45.86%, housing 10.07%, and other products, including fuel, also have a share .
The RBI had kept the retail inflation estimate at 4.5 per cent for this financial year. In the recent Monetary Policy Committee meeting, the RBI had kept its inflation estimate for this financial year unchanged at 4.5 per cent. The RBI governor had said: “Inflation is coming down, but progress is slow and uneven.” India’s inflation and growth trajectory is progressing in a balanced manner, but it is important to remain vigilant to ensure that inflation remains on target.