There was a decline in the Wholesale Inflation (WPI) rate in January. According to the data released on Tuesday, Wholesale Price-Based Inflation (WPI) has come down to 4.73%. Earlier in December it was at 4.95%. A year ago i.e. in January 2022, the inflation was 13.68%. This is also the lowest level of inflation in 24 months. In February 2021 it was at 4.83%.
The decline in inflation was due to lower prices of mineral oil, chemicals and chemical products, textiles, crude petroleum and natural gas. A day ago, the government had released the retail inflation data. Retail inflation rose to 6.52% in January. This is the highest level in three months.
Food inflation has increased from 0.65% to 2.95%.
Inflation in vegetables has increased from -35.95% to -26.48%.
Inflation in eggs, meat and fish declined from 3.34% to 2.23%.
Onion inflation has increased from -25.97 to -25.20%.
The WPI in Fuel & Power declined from 18.09% to 15.15%.
The prolonged increase in WPI is a matter of concern. It mostly affects the productive sector. If the wholesale price remains high for too long, producers pass it on to consumers. Government can control WPI only through tax.
For example, in the event of a sharp rise in crude oil, the government had cut excise duty on fuel. However, the government can deduct tax within a limit, because it also has to pay salary. In WPI, more weightage is given to factory goods like metal, chemical, plastic, rubber.