IGI Logo

Below are Perspective On WPI Data By Prof. Krupesh Thakkar, CFA, HoD, Financial Markets, ITM B-School

“Yet another month of the record high for the Wholesale Price Index (WPI), as it rose to 12.94% in May 2021 vs 10.49% in April 2021, partially owing to the unfavourable base of last year.

Sequentially, it has gone up by 0.76% led by an uptick in indices of fuel and power group (1.75%) and manufacturing products (1.24%) while the primary articles price index went down by 0.86%. There has been a persistent rise in the manufacturing price index owing to an increase in commodity price.

Though RBI might not look into these numbers too cautiously, these cost-push pressures would be seen in the Retail Inflation with a lag. Of course, the yearly Consumer Price Index (CPI) figures do depend on its segment weight-age and relative base impact, but these pressures cannot be ignored.

Meanwhile, there are chances that the current base of WPI would be changed from 2011-12 to 2017-18 as per recommendations by a working group. This is a need of the hour so that the WPI basket represents a higher number of items (1176 from 697 currently) and the corresponding weight-age representing the structural changes in the economy. Also, as WPI is used as a GDP deflator, these changes are welcomed.” 

Above views are of the author and not of the website kindly read disclaimer