Wholesale prices pick up after retail inflation crosses 3-year high level; here are key reasons

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Updated: December 16, 2019 1:58:22 PM

Cement, Cement industry, Cement  company, market news, wpi, wholesale price index, cpi, consumer price index, inflation, retail inflation, wholesale inflation, food inflationThe food items have around 15 per cent weight in the WPI whereas they weigh more than 45 per cent in the CPI.

Even as retail inflation in India touched a 3-year high, the wholesale prices in November marginally rose from over a 3-year low level in the previous month. The WPI inflation surged by 0.58 per cent in November, which was driven by rising food prices.  However, softer fuel and manufacturing prices have still kept wholesale prices under 1 per cent mark for the consecutive third month in a row. While WPI Food Index surged from 7.65 per cent in October to 9.02 per cent in November 2019, the index for ‘Crude Petroleum & Natural Gas’ group declined from 5 per cent to 3.1 per cent and the index for manufacturing group declined by 0.1 per cent.

Also Read: Worried about high inflation? It’s actually low and that is the REAL reason to worry

Build up inflation rate in the financial year so far was 2.00% compared to a buildup rate of 4.56% in the corresponding period of the previous year. WPI measures changes in the prices of goods sold and traded in bulk by wholesale businesses to other businesses. WPI is unlike the Consumer Price Index (CPI) that tracks the prices of goods and services purchased by consumers. The food items have around 15 per cent weight in the WPI whereas they weigh more than 45 per cent in the CPI, hence food inflation plays a much bigger role in determining CPI.

Watch Here: What is inflation?

Meanwhile, the retail inflation surged to a 3-year high of 5.54 per cent in November on costlier food items, showed the government data released last week. The inflation based on the Consumer Price Index (CPI) was 4.62 in October and 3.99 per cent in September. The previous high of CPI was 6.07 in July 2016. It was expected at 5.22 per cent on-year in November, according to a Bloomberg survey. The food inflation was recorded at 10.01 per cent as against 7.89 per cent last month.

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