Wholesale inflation (WPI) increased to 9.87% in June, from 9.68% in the previous month. This is the highest level of inflation in the last 44 months; Earlier in September 2022 it had reached 10.70%. The Commerce Ministry released wholesale inflation data today, July 14. This increase in inflation is due to rising prices of daily essential items and food items. If the US-Iran tension that has been going on since February does not subside, prices may increase further. Retail inflation data was released yesterday; This also increased for the sixth consecutive month to 4.38%.
**Prices of daily essential items increased**
Inflation of daily essential commodities (primary articles) increased from 4.99% to 7.00%.
Inflation of food items (food index) increased from 4.49% to 6.14%.
Wholesale inflation rate of fuel and electricity decreased from 30.33% to 27.41%.
There was no change in wholesale inflation of manufactured products; It remained at 7.48%.
**Four components of wholesale inflation**
The weightage (share) of primary commodities is 22.62%. The weightage of fuel and electricity is 13.15%, while the weightage of manufactured products is 64.23%. Primary commodities are further divided into four categories:
Food items like grains and vegetables
Non-food items (including oilseeds)
mineral
Crude Oil (Crude Petroleum)
**Impact of Wholesale Price Index (WPI) on the common man**
Prolonged high wholesale inflation has a negative impact on most of the manufacturing sectors. If wholesale prices remain high for a long time, manufacturers pass the burden on to customers. The government can control WPI mainly through taxes; For example, when crude oil prices rose sharply, it reduced excise duty on the fuel. However, there is a limit to how much tax the government can reduce. Factory-related items – such as metals, chemicals, plastics and rubber – have a significant weightage in the WPI.
**Retail inflation increased for the sixth consecutive month**
Retail inflation rose for the sixth consecutive month due to another rise in prices of food items including potatoes and ginger. It reached 4.38% in June, up from 2.74% in January and 3.93% in May. This shows rising inflation for six consecutive months.
**How is inflation measured?**
India tracks two types of inflation: retail and wholesale. The retail inflation rate is based on prices paid by ordinary consumers; It is also called Consumer Price Index (CPI). In contrast, the Wholesale Price Index (WPI) reflects prices negotiated between one business to another in the wholesale market. Many types of things are included to measure inflation. In the WPI, manufactured goods (finished goods) account for 63.75%, primary items (such as food items) account for 22.62%, and fuel and electricity account for 13.15%. At the same time, the retail inflation basket includes food and beverage products (45.86%), housing (10.07%) and fuel, among other things.
