Winning Bizness Desk
Mumbai.India’s wholesale inflation jumped to 0.83 percent in December, marking the highest level in eight months, mainly driven by higher food prices. The Wholesale Price Index, or WPI, had stood at minus 0.32 percent in November and minus 1.21 percent in October. The Commerce Ministry released the latest data on December 14, showing that the long phase of falling wholesale prices is now reversing, with everyday items becoming costlier.
Food and daily use items turn expensive
The rise in wholesale inflation was led by daily use goods and food items. Inflation in primary articles, which include essential goods, moved from minus 2.93 percent in November to 0.21 percent in December. Food inflation, measured through the food index, rose from minus 2.60 percent to zero. Fuel and power inflation remained negative, slipping slightly from minus 2.27 percent to minus 2.31 percent. At the same time, inflation in manufactured products increased from 1.33 percent to 1.82 percent.
The WPI basket includes
- Primary articles with a weight of 22.62 percent
- Fuel and power with 13.15 percent
- Manufactured products with the highest weight of 64.23 percent
Different parts of primary articles
Primary articles, which form a key part of WPI, are divided into four groups. These include food articles such as cereals, wheat and vegetables, non food items like oil seeds, minerals, and crude petroleum. Rising prices in food items have been the main reason behind the jump in overall wholesale inflation this month.
Retail inflation also moves higher
Retail inflation, which measures prices paid by consumers, also increased in December. It rose to 1.33 percent, compared to 0.71 percent in November and 0.25 percent in October, which was a 14 year low. This means both wholesale and retail prices are now moving up, raising concerns about the cost of living in the coming months.
How wholesale inflation affects common people
When wholesale inflation remains high for a long period, it begins to hurt most productive sectors. Producers usually pass on the higher cost to consumers by raising retail prices. The government can control WPI only through taxes. For example, when crude oil prices rose sharply earlier, the government cut excise duty on fuel to reduce the burden. However, such tax cuts can only be done within limits.
Items with higher weight in WPI include
- Metals
- Chemicals
- plastic
- Rubber
- Other factory based goods
How inflation is measured in India
India tracks inflation through two main indicators. Retail inflation is measured through the Consumer Price Index, or CPI, which reflects the prices paid by consumers. Wholesale inflation is measured through the WPI, which tracks prices at which goods are sold between businesses in bulk markets. In WPI, manufactured products carry about 63.75 percent weight, primary articles including food have 22.62 percent, and fuel and power have 13.15 percent. In CPI, food and products together account for 45.86 percent, housing 10.07 percent, while fuel and other items make up the rest.
