The Wholesale Price Index (WPI) increased to 9.68% in May from 8.26% in April. This is the highest level of inflation in the last 43 months; For information, let us tell you that in September 2022 it had reached 10.70%. The Commerce Ministry released wholesale inflation data today, June 15. This increase in inflation has been due to the increase in prices of daily essential commodities and fuel. Apart from this, the prices of grains and oil have also increased. It is noteworthy that tension between America and Iran has been going on for three and a half months; If the situation does not become normal then inflation may increase further.
**Rise in prices of daily essentials, fuel and electricity**
Inflation rate of articles of daily use (primary articles) increased from 3.78% to 4.99%.
The inflation rate of food items (Food Index) increased from 3.11% to 4.49%.
The wholesale inflation rate of fuel and electricity increased from 24.89% to 30.33%.
The wholesale inflation rate of manufactured goods increased from 6.68% to 7.48%.
**Four components of wholesale inflation**
The weightage of primary commodities is 22.62%. The weightage of fuel and power is 13.15%, while the weightage of manufactured goods is 64.23%. Primary commodities are further divided into four categories:
Foods like grains, wheat and vegetables
Non-food items (including oilseeds)
mineral
Crude Oil (Crude Petroleum)
**Retail inflation in May was 3.93%**
Retail inflation increased to 3.93% in May, from 3.48% in April. This is the first time in the last five months that retail inflation has come so close to the Reserve Bank of India’s target of 4%.
**Impact of Wholesale Price Index (WPI) on the common man**
In the long run, wholesale inflation has a negative impact on most 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, the government reduced excise duty on the fuel. However, there is a limit to how much tax the government can reduce. Factory goods – such as metals, chemicals, plastics and rubber – play a significant role in the WPI.
**How is inflation measured?**
There are two types of inflation in India: retail inflation and wholesale inflation. 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 the prices charged by one business entity to another in the wholesale market.
Many types of things are included to measure inflation. In the WPI, manufactured goods account for 63.75%, primary goods (such as food) account for 22.62% and fuel and electricity account for 13.15%. At the same time, the share of food items and products in retail inflation is 45.86%, the share of housing is 10.07%, and other things including fuel also contribute to this index.