WPI Inflation at 13 months high

Inflation 

It refers to the continuous increase in the price of goods and services over a period of time.

Inflation is measured in India on two indexes.CPI and WPI.

Consumer Price Index(CPI) : 

• It is also called retail inflation.
• A Consumer Price Index (CPI) is designed to measure the changes over time in the general level of retail prices of selected goods and services that households purchase for the purpose of consumption. 
• Such changes affect the real purchasing power of consumers’ income and their welfare. 
• The CPI measures price changes by comparing, through time, the cost of a fixed basket of commodities. 
• However, over the years, CPIs have been widely used as a macroeconomic indicator of inflation, and also as a tool by the Government and RBI for targeting inflation and monitoring price stability.
• CPI is also used as deflators in the National Accounts.      
• The CPI data is released by the Central Statistical Office (CSO) and the Base Year is 2010.

WPI

Wholesale Price Index(WPI)

A wholesale price index (WPI) is an index that measures and tracks the changes in the price of goods in the stages before the retail level. This refers to goods that are sold in bulk and traded between entities or businesses (instead of between consumers).

The commodities which are included in the WPI are grouped in  4 major groups 

All Commodities                               weight%

All commodities                                 100%

1. Primary articles                   22.62%
2.  Fuel and Powers                13.15%
3.  Manufactured Products    64.23% 

A separate fourth Index, Food Index has been made which has a weightage of 24.38 % in the WPI index.  It includes: The Food Index consisting of 'Food Articles' from Primary Articles group and 'Food Product' from Manufactured Products group.

Primary Articles : It includes both Food article and Non Food articles 

Food articles includes wheat,rice,pulses, vegetables,etc

Non-food articles include crude oil, minerals, natural gas, oil seeds etc.

Fuel and Powers: It includes coals, diesel, petrol, electricity etc.

Manufactured products include:      It includes industrial products like chemical products, textile, paper products etc.

• The base year of the WPI is 2011-12.
• The WPI data is released by the The Office of the Economic Adviser, Department for Promotion of Industry and Internal Trade, under the Ministry of Commerce and Industry.

NOTE 

Whenever government refers to: 

• Core Inflation :      It refers to the increase in prices of the Manufactured Products  of the WPI.
• Food Inflation : It refers to the increase in the price of the commodities  included in the food Index  of the WPI.
• Imported Inflation : It refers to the increase in the imported goods and service which is used in India for production purposes.
• For e.g if the price of crude oil increases in the international market and it is imported in India and made diesel . The price of diesel will also increase and the transporter will also increase their prices . The vegetable which is transported in the truck ,price will also increase .