Weird Price Index(WPI)!!
Inflation rate in India is calculated using WPI method.WPI stands for Wholesale Price index.But in most developed nations inflation rate is calculated using CPI method.CPI stands for Consumer Price Index.
In WPI method prices of only selected items are taken into account alongwith prices of manufactured products,oil,lubricants,light etc.But in CPI method only those goods which are directly accountable for consumers' expenditure are taken into account.
Composition of WPI:-
1)Food items constitute around 15.2% in WPI.So now even though in recent times food prices have surged by 15-20% and prices of pulses by 60%, yet rise in inflation is marginal.
2)Manufactured products make for around 64% in WPI.Now as recession has just started to cooloff so prices of manufactured products have started to slide at slow pace.This same thing is getting reflected in headline inflation!!
Manufactured products include items like Base metal prices,tobacco,leather,beverages,textile,rubber,miscellaneous.
Inflation for this month is between 0 to 1%.
3)List of items taken into account for calculating WPI and their weightage in WPI index is not updated since 1999-2000.
So though consumer is directly paying for rising food prices majorly but is still finding inflation rate to be falling!!
So now Govt. is thinking of CPI or atleast to change weightage of items in WPI.
Conclusion:- Title of the post!!!
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