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WPI at four year high
Why in the news ?
- According to government data released, wholesale inflation shot up to 5.77 per cent in June, up from 4.43 per cent in May.
- It was primarily driven by high fuel and vegetable prices.
Details
- As per the data, inflation in food articles stood at 1.80% in June 2018, as against 1.60% in the preceding month.
- Inflation in vegetables jumped to 8.12% in June, from 2.51% in the previous month.
- Inflation in ‘fuel and power’ basket too rose sharply to 16.18% in June from 11.22% in May as prices of domestic fuel increased during the month in line with rising global crude oil rates.
- Data released last week showed retail inflation scaled a 5-month high of 5% in June on costlier fuel.
- RBI mainly takes into account retail inflation data while formulating monetary policy.
- Rising inflation affirms RBI’s forecast. The apex bank has revised upwards its retail inflation projection for October-March to 4.7% from 4.4% earlier.
- In its second monetary policy review for the fiscal, the Reserve Bank last month hiked interest rate by 0.25% - the first hike in more than four years -- due to growing concerns about inflation stoked by rising global crude oil prices as well as domestic price increases.
Wholesale Price Index (WPI)
- WPI index reflects average price changes of goods that are bought and sold in the wholesale market.
- Wholesale price indexes report monthly to show the average price changes of goods sold in bulk, and they are a group of the indicators that follow growth in the economy.
- WPI includes all the manufactured products and CPI includes food and services part.
- Whereas, the Retail Inflation measures changes in the price level of a 'market basket' of consumer goods and services purchased by households.
Source
Indian Express, LiveMint.