Wholesale inflation rate fell and remained at -0.26% in September: How does this affect consumers?
On Monday, October 16, the Indian government made the wholesale pricing index (WPI) information for the month of September available. The wholesale inflation rate was -0.26%, falling for the sixth consecutive month.
Read more: NSO: Consumer Price Index (CPI) measured at 5.02% for the month of September
The inflation rate in August was -0.52%, while in July it was -1.36%.
According to the government, the deflation in September was caused by lower prices for chemical and chemical products, mineral oil, textiles, basic metals, and food items when compared to the same month last year.
What is Wholesale price Index and what it depicts?
To keep track of the overall rate of change in producer and wholesale prices, wholesale price indexes are published regularly. The base value of the index, which has a value of 100, is determined by the number of times that prices have changed for the entire output of goods.
Commodity prices are often included in a WPI; however the products that are counted differ from nation to nation. They can also be changed if that's what's required to accurately reflect the state of the economy. Many small countries only compare the pricing of 100 to 200 products, while larger countries routinely include thousands of products in their WPIs.
What is measured by the wholesale price index?
The Wholesale Price Index, or WPI, measures the change in prices of goods that wholesale businesses sell and exchange with other businesses in large quantities. WPI tracks factory gate costs before retail prices, in contrast to the Consumer Price Index, or CPI, which tracks prices of products and services purchased by consumers.
September's core inflation rate was -1.4% as opposed to -2.2% in August.
Which goods saw price decreases and which saw price increases?
Out of the 22 two-digit National Industrial Classification (NIC) groupings for manufactured goods, 14 groups saw price increases and 8 groups saw price decreases. Among other things, the increase was caused by basic metals, transportation equipment, fabricated metal goods, machinery and equipment, rubber, and plastic goods. Automobiles, semi-trailers, electrical equipment, leather goods, chemicals, and chemical products all saw a drop in sales.
In September, there was a month-over-month increase in the price of electricity (0.51%) and mineral oil (3.67%). In contrast, the cost of coal decreased (-0.65%) from the previous month.
How does it will affect consumers?
Fund movements in the commodity market, which are in turn influenced by events on a global scale, affect wholesale prices. As a result, wholesale prices are more unstable. Because of contracts or because they anticipate the price increase to be temporary and don't want to negatively impact the consumer and subsequently demand, wholesalers frequently don't pass on all of their pricing changes to the retailer.
The wholesale price index (WPI) tracks changes in average wholesale prices, giving information about inflation and pricing trends for commodities supplied to corporations and retailers rather than to individual consumers. However, if the situation persists for long, the consumer will be affected by the price modification through either increased or decreased pricing.
Given that it includes a variety of industries like agriculture, manufacturing, and mining, this index offers useful insights into the inflationary forces present in an economy. By monitoring the WPI, analysts can examine price changes earlier in the manufacturing process, enabling them to forecast prospective changes in consumer prices and evaluate a country's overall economic health.
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