This means that overall price increases at the wholesale level have remained under control.
Why Did Inflation Stay Steady?
Food Prices Dropped: Food inflation eased to 7.47% (compared to 8.89% in December), mainly because vegetable prices fell.Cereal Prices Went Up: Prices of cereals increased slightly to 7.33% from 6.82% in December.
Manufactured Goods Became Costlier: Prices of manufactured products, which make up 64% of WPI, rose by 2.51% (higher than 2.14% in December).
Fuel Prices Fell: Prices of fuel and power dropped by 2.78%, following a 3.79% decline in December.
How Does This Affect You?
Retail inflation (prices you pay at stores) is also slowing down.The RBI has cut interest rates for the first time in nearly five years to boost economic growth.
The RBI expects inflation to average 4.8% this year and 4.2% next year—but warns that global energy price changes could affect this prediction.
Conclusion
Food prices are stabilizing, fuel prices are falling, and inflation is under control.This is good news for businesses and consumers, but global factors like oil prices could still impact inflation in the future.
What is WPI (Wholesale Price Index) ?
Imagine you are a businessman who runs a wholesale store.
You buy rice, wheat, sugar, and other essentials in bulk from suppliers and sell them to retailers.
One day, your supplier tells you, "The price of wheat has increased because the crop yield was lower this year."
At the same time, your transport partner says, "Diesel prices have gone up! So, the cost of delivering goods is higher."
Since your costs have increased, you have no choice but to sell goods at higher prices to retailers.
And when retailers buy from you at a higher price, they increase the prices for consumers at grocery stores.
This is exactly how inflation moves from wholesale markets to retail markets and this is what the Wholesale Price Index (WPI) measures!
WPI tracks how much wholesale prices change over time.
It doesn’t track the prices consumers pay, but rather the cost businesses like yours pay for goods before they reach consumers.
You buy rice, wheat, sugar, and other essentials in bulk from suppliers and sell them to retailers.
One day, your supplier tells you, "The price of wheat has increased because the crop yield was lower this year."
At the same time, your transport partner says, "Diesel prices have gone up! So, the cost of delivering goods is higher."
Since your costs have increased, you have no choice but to sell goods at higher prices to retailers.
And when retailers buy from you at a higher price, they increase the prices for consumers at grocery stores.
This is exactly how inflation moves from wholesale markets to retail markets and this is what the Wholesale Price Index (WPI) measures!
WPI tracks how much wholesale prices change over time.
It doesn’t track the prices consumers pay, but rather the cost businesses like yours pay for goods before they reach consumers.
Why Should You Care?
- If WPI increases, it means businesses like yours are paying more for goods. This might later lead to higher prices for consumers.
- If WPI falls, wholesale prices are dropping, which could mean lower inflation for consumers later.
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