WHOLESALE INFLATION DROPS TO THREE-MONTH LOW

Why in the news?

Wholesale inflation fell to 2.04% in July, its lowest in three months, due to decreased food prices and lower global commodity costs, signalling easing economic pressures.

WHOLESALE INFLATION DROPS TO THREE-MONTH LOWsource:wordpress

Wholesale Inflation Declines to Three-Month Low

  • Current Inflation Rate:
    • India’s wholesale inflation dropped to 2.04% in July, marking the lowest rate in the last three months. This decrease follows a 16-month high of 3.36% in June.
  • Key Factors Behind the Decline:
    • Food Prices: The main contributor to the decline was a reduction in food inflation, driven by lower vegetable prices, which fell significantly from June’s 7.75% to 3.55% in July.
    • Non-Food Articles: Prices for non-food articles also declined by 2.90% in July, a sharper decrease compared to the 1.95% drop in June.
    • Fuel and Power: Fuel and power prices rose by 1.72% in July, a marked decrease from June’s 8.68%. Crude petroleum and natural gas prices increased by 8.93% annually, down from 12.55% in June.
About Wholesale Price Index (WPI):

  • Definition: Measures price changes of goods sold in bulk by wholesalers.
  • Publication: Calculated and published monthly by the Office of Economic Advisor, Ministry of Commerce and Industry.
  • Usage: Tracks supply and demand in industry, manufacturing, and construction; indicates inflationary pressures.
  • WPI vs. CPI: WPI tracks wholesale prices only; CPI measures average household prices for goods and services.
  • RBI uses CPI for policy, not WPI.
  • Calculation: Weighted average of prices; includes Primary Articles (22.62%), Fuel and Power (13.15%), Manufactured Products (64.23%).

About Consumer Price Index(CPI):

  • Purpose: Measures price changes from a retail buyer’s perspective.
  • Released By: National Statistical Office (NSO).
  • Coverage: Calculates price differences for commodities and services such as food, medical care, education, electronics, etc.
  • Sub-Groups: Includes food and beverages, fuel and light, housing, clothing, bedding, and footwear.

Types:

  • CPI for Industrial Workers (IW)
  • CPI for Agricultural Labourer (AL)
  • CPI for Rural Labourer (RL)
  • CPI (Rural/Urban/Combined)
  • Compilation: CPI-IW, CPI-AL, and CPI-RL by Labour Bureau; CPI (Rural/Urban/Combined) by NSO.
  • Base Year: CPI’s general base year is 2012; CPI-IW base year is 2016 (new series).

Associated Article:

https://universalinstitutions.com/wpi-inflation-rate/