India’s Wholesale Inflation Rises in October 2024
In October 2024, India’s wholesale inflation saw a significant increase, with the annual rate reaching 2.36% compared to the previous year. This marks a year of positive wholesale inflation. Economists suggest that a slight rise in wholesale inflation can encourage manufacturers to produce more goods.
Food Inflation
The food index, which holds a 24.38% weightage, experienced a wholesale inflation rate of 11.59% in October, up from 9.47% in September and 3.21% in August. The rise in WPI inflation is attributed to increased prices in food articles, manufacturing of food products, machinery, and motor vehicles.
Historical Context
In April of the previous year, wholesale inflation was negative, similar to the early COVID-19 period in July 2020. Notably, WPI-based inflation was in double digits for 18 months until September 2022.
Retail Inflation
India’s retail inflation in October was 6.21%, surpassing the Reserve Bank of India’s 6% upper tolerance level. High food inflation was driven by rising prices of vegetables, fruits, and oils. Policymakers aim to reduce retail inflation to 4% sustainably.
Future Outlook
The focus will be on the Kharif harvest season and rabi sowing progress. The RBI has maintained the repo rate at 6.5% to control inflation. The repo rate is the interest rate at which the RBI lends to other banks.
Doubts Revealed
Wholesale Inflation -: Wholesale inflation is the increase in prices of goods sold in large quantities, usually to businesses, before they reach the consumer. It shows how much more expensive it is for businesses to buy products.
Food Index -: The food index measures the change in prices of food items over time. It helps us understand how much more or less we are paying for food compared to before.
Retail Inflation -: Retail inflation is the increase in prices of goods and services that consumers buy directly. It affects how much we pay for things like groceries, clothes, and other everyday items.
Reserve Bank of India -: The Reserve Bank of India (RBI) is the central bank of India. It manages the country’s money supply and interest rates to keep the economy stable.
Repo Rate -: The repo rate is the interest rate at which the RBI lends money to commercial banks. It influences how much interest we pay on loans and affects inflation.
Kharif Harvest -: Kharif harvest refers to the crops that are grown during the monsoon season in India, like rice and maize. The success of this harvest can affect food prices and inflation.
Rabi Sowing -: Rabi sowing is the planting of crops that are grown in the winter season in India, like wheat and barley. The timing and success of this sowing can impact food supply and prices.
