Wholesale price index 13.56% in December, marginally lower than November, wholsale price, retail price | Wholesale price index 13.56% in December, marginally lower than November
By Amit - January 14, 2022
Mumbai13 minutes ago
The Wholesale Price Index (WPI) stood at 13.56% in the month of December. It has declined marginally as compared to 14.23% in November. Although it has been consistently above 10% for the last 9 months. The wholesale prices of vegetables stood at 31.56% as against 3.91% in November. That is, it has increased almost 8 times in a month.
Highest inflation in 30 years
Bloomberg said in a survey in November that this is the highest inflation rate in the last three decades, ie since December 1991. Wholesale price refers to wholesale inflation. Like you buy goods in two ways. One you go to retail and buy from shops, and second you buy the same goods in wholesale price from a big dealer. Compared to 1.95% in December 2020, there has been an increase of almost 7 times in wholesale inflation.
Manufacturing product inflation stood at 10.62% in December 2021, from 11.92% in November. There has been a decline in this segment. Apart from these, the inflation rate of fish, mutton and egg stood at 6.68%. It was 9.66% in November, which has registered a decline.
Inflation increased due to many reasons
The Ministry of Commerce and Industry said in a statement that the rate of inflation in December 2021 has increased mainly due to textiles, paper and its products along with oils, metals, crude oil, chemical and food products. In the data released by the government, it has been said that onion prices have decreased during this period compared to November.
Onion prices fall
Onion prices have come down from 30.10% to 19.08% in December. Potato prices have also fallen in wholesale prices. Similarly, when it comes to the fuel and power segment, it has also declined in comparison to November. It was 39.81% in November, which came down to 32.30% in December.
food inflation rises
However, food inflation has increased. It has increased from 6.70% to 9.24%. Wholesale inflation has been consistently above 10% since April last year. In November, it had reached the highest at 14.23%. People are also worried about retail inflation. Its figures were released on Wednesday itself, in which it stood at 5.59% in December, which was 4.91% in November.
Retail inflation map shows wholesale inflation
Broadly understand that the wholesale inflation rate shows a map of the retail inflation rate in the coming times. If the wholesale inflation rate continues to rise, then the retail inflation will also increase, provided there is no sudden fluctuation in the middle. Both the inflation rates are related to each other even though they are different. Also, their effect is not only on your kitchen and pocket. Your bank balance, investments and financial plans are also affected by the inflation rate.
only deals with wholesale prices
Wholesale inflation is related to wholesale prices only. In the language of economy, this is called ‘Factory Gate Price’. That is, the cost of that item only includes the cost of making it. It does not include taxes, transportation, margin of distributor or retailer and other expenses. As these expenses add up, the cost of that item also increases.
Wholesale inflation only keeps an eye on the goods
Wholesale inflation takes into account only the price of goods, whereas retail inflation includes the price of goods as well as services. This means that Retail Inflation also tracks your mobile, school fees to travel, entertainment, house rent and medical expenses.
65% manufacturing share in wholesale
The Wholesale Inflation Rate (WPI) comprises 65 per cent of the manufacturing goods in the basket. These include cars, TVs, mobiles, clothes to heavy machinery items. But it gives only 20% preference to food items like cereals, fruits and vegetables and things like gas in its basket. Fuel and electricity have got 13% space.
Petroleum also in wholesale
The basket of the wholesale index contains many such items, including petroleum, which are directly affected by the international market and prices. Many times it also happens that the prices of crude oil keep increasing or decreasing in the international market, but due to increase, reduction or no change in excise and VAT by the central or state governments in the country, the wholesale and retail inflation rate has increased significantly. difference comes.
How inflation affects bank deposits
Suppose you made a fixed deposit of Rs 1 lakh in a bank for one year, on which 4% interest is to be paid. Now you are assuming that after adding 4 thousand rupees return after one year, you will get 1 lakh 4 thousand rupees. If the inflation rate remains 4% that year, the scene will change. In your eyes you got 1 lakh 4 thousand. But since the prices of things have also increased at the same rate, so your price of 1 lakh 4 thousand in the market is actually only 1 lakh. That is, the goods that you could buy for 1 lakh rupees a year ago, now it will be available for 1 lakh 4 thousand.
Inflation is controlled by increasing interest
Governments often raise interest rates to control inflation. This reduces the liquidity in the market, that is, less money comes in the hands of the spenders. This also helps in reducing inflation. But here the matter is not so one-sided. There are reasons for rising inflation and sometimes inflation decides the rates of RBI. Today, when inflation is increasing continuously for the last 9 months, the pressure on RBI has increased to increase the policy rates.
Although raising the interest rate will control inflation, but it can also have the opposite effect. If there is a shortage of capital in the economy, then production and supply will also be affected. If the supply decreases, then the prices will start rising.