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Fuel prices quicken WPI inflation

#GS3 #Economy

Inflation Trend

  • Inflation in wholesale prices was 11.39% in August. Thus is the fifth month in a row that WPI is staying in the double digits.
  • Inflation in manufactured products increased to 11.4%. This is for the fourth month in a row. The reason is the second order effects of high fuel prices.
  • Although there was reduction in Fuel and power inflation in July, it went up to 26.1% in August. This is despite of the food price inflation that decreased to 3.43% from 4.46% .
  • LPG, petrol and diesel witnessed inflation of 48.1%, 61.5% and 50.7% respectively.  
  • High fuel inflation affects other sectors as they push up transport, input and wage costs.
  • Core WPI inflation (except fuel and food) reached an all-time high of 11.1%. 
  • But wholesale inflation had moderated to 11.16% in July compared to the record high of 13.11% in May.

What is Wholesale Price Index WPI? 

  • It is the most widely used inflation indicator in India. 
  • Published by the Office of Economic Adviser, Ministry of Commerce and Industry. 
  • All transactions at the first point of bulk sale in the domestic market are included. 
  • Major criticism for this index is that the general public does not buy products at wholesale price. 
  • The base year of All-India WPI has been revised from 2004-05 to 2011-12 in 2017. 
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