• Source:JND
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Wholesale Inflation:  In line with the rise in retail inflation, India's wholesale inflation also witnessed a significant increase in October. The annual inflation rate based on the All-India Wholesale Price Index (WPI) stood at 2.36 per cent (provisional) for the month of October 2022 (over October 2021). Wholesale inflation has remained in positive territory for the past year.

Economists often state that a slight increase in wholesale inflation is beneficial since it typically encourages goods manufacturers to produce more. The wholesale inflation rate for the food index, which has a weightage of 24.38 per cent, was 11.59 per cent in October, up from 9.47 per cent in September. It was 3.21 per cent in August. The government said the WPI inflation in October 2022 was mainly due to an increase in prices of food articles, manufacture of food products, other manufacturing, manufacture of machinery and equipment, and manufacture of motor vehicles, trailers and semi-trailers.

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The government publishes wholesale price index numbers on a monthly basis on the 14th of each month (or the next working day). The index numbers are compiled using data received from institutional sources and selected manufacturing units across the country.

Wholesale inflation had turned negative in April last year. Similarly, in the early days of COVID-19, in July 2020, WPI was reported to be negative. Notably, the Wholesale Price Index (WPI)--based inflation had remained in double digits for 18 consecutive months until September 2022. Meanwhile, India's retail inflation stood at 6.21 per cent in October, breaching the Reserve Bank of India's upper tolerance level of 6 per cent.

The high food inflation in October was mainly due to a rise in the inflation of vegetables, fruits, oils and fats. Food prices continue to remain a problem for policymakers in India, who want to bring retail inflation down to 4 per cent on a sustainable basis.

Going forward, all eyes will be on the Kharif crop season as well as the progress of Rabi sowing. To keep inflation under check, the RBI has kept the repo rate at 6.5 per cent. The repo rate is the rate at which the RBI lends to other banks.

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(With ANI's Inputs)

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