Latest Data on India's WPI Inflation and Its Impact

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Source: CMIE Economic Outlook, 1 Finance Research

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What does the Wholesale Price Index - Food Articles data represent?

The Wholesale Price Index (WPI) - Food Articles data represents the changes in the prices of food commodities such as cereals, vegetables, eggs, meat & fish, and oilseeds at the wholesale level over a specific period.
Food Articles constitute 15.26% in the Wholesale Price Index (WPI).

This data is a crucial indicator of the price trends of agricultural commodities at the wholesale level, which can be different from retail prices.
Changes in the WPI for food articles can directly impact the income and profitability of farmers and producers, as it reflects the price they receive for their produce.
The index provides insights into supply chain dynamics, including the impact of transportation, storage, and market conditions on wholesale prices.
Fluctuations in the WPI can influence agriculture market dynamics, affecting demand and supply and also farming decisions such as crop choices and investment in agricultural inputs.
WPI might influence retail markets, economic policies, including agricultural subsidies, export-import policies, and monetary policy.
International price trends and trade policies impact the WPI for food articles.

Inflation is measured by the Year-on-Year (YoY) percentage change in the level of the index. An increase in the index indicates inflation (rising prices) compared to previous year, while a decrease in the index suggests deflation (falling prices). A slowdown in the inflation rate over the month suggests disinflation.
Rising trends might indicate increasing demand or supply constraints, while declining trends could suggest oversupply or reduced demand in the wholesale markets.
High food prices at wholesale level can lead to increased income for farmers if they correlate with higher prices for their produce. WPI trends in food articles influence retail price trends with the price transmission from wholesale to retail markets.
Agricultural output levels and fluctuations in international commodities directly impact wholesale prices. For instance, a high output usually leads to lower wholesale prices, unless there is a proportionate increase in demand.
Consistently rising inflation indicates challenges in the farm sector, such as rising input costs, which can affect the profitability of farming, but sometimes the farmers may also get higher prices for their produce. Conversely, a stable or declining WPI can suggest lower prices for farm produce but relatively stable input cost pressures.