Food Inflation is six week low
Retail Inflation: All India retail inflation is 8.72 per cent and it fell short due to decrease in food prices. Retail inflation is based on Consumer Price Index for industrial workers (CPI-IW). Overall Inflation measured in WPI was 9.06 percent.
Food Inflation: Food inflation has come down to 7.78 per cent on 18 June. It is six week low price. During the week prices of potatoes, fruits and chicken dropped by .63%, 0.24% and 4% during the week, While prices of wheat and pulses rose by 1.01% and 0.6%.
General Inflation: General inflation measured in WPI accelerated to 9.06% in May from 8.66% in April.
What is Inflation? How it is calculated?
India uses the Wholesale Price Index (WPI) to calculate and then decide the inflation rate in the economy. WPI is the index used to measure the change in the average price level of goods traded in wholesale market.
WPI was first published in 1902, and was one of the more economic indicators available to policy makers until it was replaced by most developed countries by the Consumer Price Index in the 1970s.
The Indian government has taken WPI as an indicator of the rate of inflation in the economy.
This WPI index includes prices to total 676 items.
Why do Prices Rise?
Inflation is a rise in the prices of goods and services in an economy over a period of time. When the price rises, each unit of currency buys fewer goods and services. The purchasing power of money falls when inflation is high. An inflationary situation is when there is ‘too much money chasing too few goods’.