WPI inflation at 1.48% in October 2020; Increased for third consecutive month

November 17, 2020

The Wholesale Price Index (WPI) increased to 1.48% in October 2020. This was the highest in the past eight months.

Key Highlights

The inflation rate based on WPI Food Index fell from 6.92% in September 2020 t0 5.78% in October 2020. The WPI manufacturing increased to 2.12% in October 2020 as compared to 1.61% in September 2020.

RBI views on current inflation

According to RBI, the current inflation is unrelenting. The apex bank believes that the recent measures of Government of India such as imposition of stock limits on onion traders, temporary reduction of import duties on pulses and imposition of stock limits on imports of onions and potatoes have not kept the prices under check. Also, RBI predicts that there are possibilities for collapse of external demand due to second COVID-19 wave globally. This will further affect the exports.

Wholesale Price Index

  • It represents the price of wholesale goods. It mainly focuses on goods traded between corporation. The main objective of WPI is to monitor price drifts. It helps to assess microeconomic and macroeconomic conditions of the economy.
  • India faced the highest inflation rate of 34.68% in September 1974.
  • The WPI is released by the Ministry of Commerce and Industry
  • The base year of Wholesale Price Index is 2011-12. Earlier it was 2004-05. It was revised in 2017.

What does WPI reveal?

When there is an upward surge in WPI, it indicates an inflationary pressure in the economy. When there is a downward surge, it says that the economy of deflating.

What are the major components of WPI?

The primary articles used to calculate WPI are divided into Food Articles and Non-Food Articles. The Food Articles include paddy, cereals, wheat, vegetables, milk, fruits, eggs, fish, etc. The Non-food Articles are minerals, oil seeds and crude petroleum. Apart from these, the WPI basket also includes fuel and power, manufactured goods. The manufactured goods include apparels, textiles, paper, plastic, chemicals, metals, cement and many more. Also the manufactured goods basket include tobacco products, sugar, animal oils, etc.

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