CPI and WPI based inflation Data Updates
The Wholesale Price Index reduced to 4.73% and the Consumer Price Index increased to 6.52% in January 2023. The WPI was 4.95% in December 2022 and the CPI was 5.72% in December 2022. In January 2022, the WPI was 13.68%.
What caused WPI to reduce in January 2023?
The decline comes mainly due to chemicals, mineral oils, textiles, natural gas, textiles, food products, and crude petroleum. The overall inflation in manufactured goods was reduced. However, in food items, it increased to 2.38% in Jan 2023 and compared to -1.25% in Dec 2022.
Inflation in fuel and power reduced to 15.15% in Jan 2023. It was 18.09% in Dec 2022. Also, inflation of manufactured goods reduced from 3.37% in Dec 2022 to 2.99% in Jan 2023.
Another main reason for the declining inflation is the reduction of global prices.
CPI breaching RBI targets
RBI had set a target of 6% for CPI inflation. It rose to 6.52% in Jan 2023 breaching RBI targets. If it keeps increasing, by April there will be liquidity tightening.
The Reserve Bank of India recently increased the repo rate by 25 bps to control the increasing inflation in the country. RBI has increased the repo rate by 250 bps since May 2022.
Note: CPI gives importance to the food products and other primary products used by the citizens. While WPI is about manufactured products.
Category: Economy & Banking Current Affairs - 2022