Wholesale inflation increased after remaining below zero for 7 months

Food inflation rate increased in November

• Food inflation has increased from 1.07% to 4.69% compared to October.
• The inflation rate of daily essential goods has increased from 1.82% to 4.76%.
• The wholesale inflation rate of fuel and electricity has declined from -2.47% to -4.61%.
• The inflation rate of manufactured products has increased from -1.13% to -0.64.

Retail inflation increased to 5.55% in November
Earlier, the government had released retail inflation figures on December 12. According to them, India's retail inflation has increased to 5.55% in November after three months of decline. The reason for this is the high prices of vegetables and fruits. Retail inflation in October was 4.87%. Whereas in September it was 5.02%.

According to Department of Consumer Affairs data, onion prices rose 58% month-on-month (MoM) in November, while tomato prices rose 35%. Apart from this, potato prices also saw an increase of 2% in November.

Impact of WPI on common man
Prolonged increase in wholesale inflation has a negative impact on most productive sectors. If wholesale prices remain high for too long, producers pass the burden on to consumers. Government can control WPI only through tax.

For example, in the situation of sharp increase in crude oil, the government had reduced the excise duty on fuel. However, the government can reduce tax cuts only within a limit. In WPI, more weightage is given to factory related goods like metal, chemical, plastic, rubber.

How is inflation measured?
There are two types of inflation in India. One is retail, i.e. retail and the other is wholesale inflation. Retail inflation rate is based on the prices paid by ordinary consumers. It is also called Consumer Price Index (CPI). Whereas, Wholesale Price Index (WPI) means the prices that one trader charges from another trader in the wholesale market.

Different items are included to measure inflation. For example, the share of manufactured products in wholesale inflation is 63.75%, primary articles like food 20.02% and fuel and power 14.23%. At the same time, the share of food and products in retail inflation is 45.86%, housing is 10.07% and other items including fuel also have a share.

In India inflation is measured by WPI and in America by PPI.
WPI is used to measure inflation in India. Fiscal and monetary policy changes are greatly affected by changes in WPI. Whereas in America, Producer Price Index (PPI) is used to measure inflation.