In November, the wholesale inflation rate dropped to 1.89%, compared to 2.36% in October and 1.84% in September. The primary reason for this decline is the reduction in the prices of vegetables and food items.
The prices of food items and primary goods have decreased.
The inflation rate for daily necessities fell from 8.09% to 5.49%.
The inflation rate for food items dropped from 11.59% to 8.92%.
The wholesale inflation rate for fuel and energy decreased from -5.79% to -5.83%.
The wholesale inflation rate for manufactured products increased from 1.50% to 2.00%.
Impact of Wholesale Inflation
Prolonged high wholesale inflation negatively impacts the productive sector. When wholesale prices rise, producers often pass on the burden to consumers. The government can control the Wholesale Price Index (WPI) primarily through taxes, as seen when the government reduced excise duty on fuel in response to a sharp rise in crude oil prices. However, tax cuts can only be implemented up to a certain limit.
How Inflation is Measured
India tracks two types of inflation: retail inflation (CPI) and wholesale inflation (WPI). Retail inflation is based on the prices paid by consumers, while WPI reflects the prices at the wholesale market level, where businesses charge each other. Manufactured products make up the largest share of the WPI, whereas food items and products contribute significantly to retail inflation.
