The Wholesale Price Index (WPI) gives you the inflation figure that tells how much costlier goods have become in the Indian economy. The index was at 151.7 in May 2011, an increase of 9.06% over May last year. So if a complete basket of goods cost you Rs100 in May 2010, you will have to shell out Rs109.06 for it now.
But to reach this one number, the index factors in a lot of data. A look at these may help you pinpoint what you are paying more for.
To reach the inflation figure, the index packs in a lot of data. Essentially, it considers three main product groups—primary articles, fuel and power and manufactured goods. Within each group there are subgroups and within the subgroup, smaller groups and specific items. In all, there are 20 subgroups for which prices are compared—five fall in the primary articles group, three in fuel and power and 12 in manufactured products.
The prices of these articles would impact your daily sustenance and it hits the poor the hardest. This part of WPI, constituting 20.12% of the index, compares prices of all basic material, including food and non-food articles. Among food articles, some of the main heads are foodgrain, fruits and vegetables, eggs, meat and fish. In the non-food subgroup, some of the major heads under which prices for specific items are compared are fibre and oil seeds. For the week ended 11 June, the primary articles index was at 198.1, an increase of 12.62% over the last year.
Fuel and power
Life, especially in urban areas, is hard to imagine without power or fuel. This part of the index compares prices for all materials and items needed to produce power and fuel. It constitutes 14.91% of the overall index. This group consists of three subgroups—coal, mineral oils and electricity. The subgroup mineral oil has the maximum weight of 9.36% (of the overall index). Items such as kerosene, diesel, liquefied petroleum gas (LPG) and petrol fall in this category. We may see a jump in the index price for the coming weeks given the recent hike in diesel and LPG prices. For the week ended 11 June, the fuel and power index was at 159.9, an increase of 12.84% over the previous year.
This constitutes the largest part of the index—64.97%. There are many subgroups in this category; some of the main ones are chemical and chemical products, basic metals, alloys and metal products, food products, machinery and machine tools and textiles. This may not affect you directly, but it means price changes in products, such as vehicles, clothes, furniture, soaps and shampoo, among other things.
Ferrous alloys, a group item, which falls in the basic metals subgroup is one of the largest single contributor to the overall WPI at 8.06%. For the month ended May 2011, the manufactured goods index was at 137.2, an increase of 7.3% over May 2010.