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WPI at 14.55 Percent, CPI At 6.95 Per cent

The two figures that reflect different kinds of inflation in India have touched a multi-month high, according to data by the government

WPI at 14.55 Percent, CPI At 6.95 Per cent
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The two figures that reflect different kinds of inflation in India have touched a multi-month high, according to data by the government. The figures released by the Department for Promotion of Industry and Internal Trade (DPIIT) showed that Wholesale Price Index-based inflation stood at 14.55 per cent in March.

This is the highest since November 2021. Consumer Price Index-based inflation, on the other hand, stood at 6.95 per cent as reflected by data by the Ministry of Statistics and Programme Implementation (MoSPI). CPI is commonly called Retail inflation.

Under CPI, the government calculates inflation based on the prices of goods that a common consumer in the country consumes. It lays emphasis on the food & beverage category. Along with that, CPI also has categories like clothing & footwear, housing and fuel. It shows the direct impact of high prices on the pockets of the consumers. Interestingly, it gives weightage to the price of services also.

WPI takes into account the inflation in the category of products, which are bought in bulk by the wholesalers. These may or may not have an impact on the final consumers.

Also, this index lays a heavy weight on the manufacturing of the goods. It excludes services and considers only goods for the calculation.

Usually, the two indices can be disconnected from each other. A rise in retail inflation, may not push the WPI upwards and vice versa. This is because the basket of goods considered to calculate both the figures is different.

For example, a rise in the prices of manufactured goods like TV and vehicles may raise the WPI levels, but it will not have much bearing on the CPI. Similarly, the rise in the prices of vegetables will push CPI upwards, but will not impact WPI much.

In the current state of the Indian economy, however, both of the indices are at a multi-month high. It means that the consumer is taking a beating from all sides. The manufactured goods are costly, and so are the consumer goods. It means that the pressure of high prices has reached worrisome levels.

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