WPI's warning
I remember I had bought a Pepsi ball for INR 5 and a stumper ball for INR 10 before 15 years ago. Can the same stumper ball be bought with INR 10 now? The current price of stumper ball is somewhere close to INR 30. So, I can't buy a stumper ball for ten rupees now, which I did a decade earlier. Purchasing power of money has been reduced from the previous decade. Inflation can be defined as a rise in the general level of prices of goods and services in an economy over a period of time.
Inflation rate can be defined as an annualized percentage change in a general price index. Inflation is usually measured by CPI or WPI.
The Consumer Price Index (CPI) comprises retail prices that consumers pay for a basket of goods, whereas the Wholesale Price Index comprises wholesale prices that wholesale buyers pay for a basket of goods.
Below is the composition of WPI
From the WPI image we can clearly see the inflation rate for fuel and power has increased from 31.5% in February to 34.5% in March largely due to the ongoing Russian Invasion on Ukraine.
Though we are projected to grow at 8.2% by IMF's GDP forecast for the year 2022-23, we can't let our guard down as we are still recovering from the covid slump. We have to keep a tab on WPI and be vigilant at this juncture.
Source: NDTV
External links: Investopedia