CPI-IW marginally falls to 7.75% in May
Inflation based on consumer prices for industrial workers (CPI-IW) has slowed down in May even as inflation based on wholesale price index (WPI) is surging. CPI-IW declined to 7.75% in May after rising to 7.81% in April as food prices started cool...
By ET Bureau |
NEW DELHI: Inflation based on consumer prices for industrial workers (CPI-IW) has slowed down in May even as inflation based on wholesale price index (WPI) is surging. CPI-IW declined to 7.75% in May after rising to 7.81% in April as food prices started cooling.
Food items have a heavy weight in CPI-IW, while manufactured goods constitute the majority in WPI. The inflationary impact on consumers, therefore, turned out to be much lighter than what has been perceived under the WPI.
Economists said the CPI would move up once the rise in fuel prices and other commodities gets factored into the prices of goods in the consumption basket. Fuel prices were raised in early June. The country���s chief statistician Pronab Sen had earlier said the consumer price index won���t capture the first round impact of fuel prices.
According to Crisil���s principal economist D K Joshi: ���The marginal fall in CPI-IW is due to the easing prices in the food basket. But as the cascading effect of the price rise of fuel, minerals and other commodities gets factored in, the consumer will feel the pinch.���
The main reason for the divergence in CPI and WPI is the difference in the basket of commodities. For instance, the food group has a weight of 46.2% in CPI-IW, compared to about 27% in WPI. Moreover, while tradable commodities, especially manufactured goods, have a larger weight in WPI, non-tradable services such as medical care, education and recreation, transport and communication and personal care form 23.3% of the CPI-IW basket, along with another 15% for housing (calculated on the basis of rentals).
The point-to-point rate of inflation for May 2008 is 7.75% as compared to 7.81% in April. CPI-IW for May increased by one point to reach 139. During May, the index recorded the maximum increase of 7 points in Goa, 3 points each in Vijaywada, Godavarikhani, Rourkela and Tiruchirapally centres, 2 points in 7 centres and 1 point in 21 centres.
The index fell by 2 points each in Jaipur, Jalandhar, Ludhiana and Lucknow centres and decreased by 1 point each in 13 centres, while in the remaining 28 centres the index remained stationary. The maximum increase of 7 points in Goa centre is mainly due to the increase in prices of rice, fish fresh, poultry, goat meat, snack saltish and synthetic sarees.
Food items have a heavy weight in CPI-IW, while manufactured goods constitute the majority in WPI. The inflationary impact on consumers, therefore, turned out to be much lighter than what has been perceived under the WPI.
Economists said the CPI would move up once the rise in fuel prices and other commodities gets factored into the prices of goods in the consumption basket. Fuel prices were raised in early June. The country���s chief statistician Pronab Sen had earlier said the consumer price index won���t capture the first round impact of fuel prices.
According to Crisil���s principal economist D K Joshi: ���The marginal fall in CPI-IW is due to the easing prices in the food basket. But as the cascading effect of the price rise of fuel, minerals and other commodities gets factored in, the consumer will feel the pinch.���
The main reason for the divergence in CPI and WPI is the difference in the basket of commodities. For instance, the food group has a weight of 46.2% in CPI-IW, compared to about 27% in WPI. Moreover, while tradable commodities, especially manufactured goods, have a larger weight in WPI, non-tradable services such as medical care, education and recreation, transport and communication and personal care form 23.3% of the CPI-IW basket, along with another 15% for housing (calculated on the basis of rentals).
The point-to-point rate of inflation for May 2008 is 7.75% as compared to 7.81% in April. CPI-IW for May increased by one point to reach 139. During May, the index recorded the maximum increase of 7 points in Goa, 3 points each in Vijaywada, Godavarikhani, Rourkela and Tiruchirapally centres, 2 points in 7 centres and 1 point in 21 centres.
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The index fell by 2 points each in Jaipur, Jalandhar, Ludhiana and Lucknow centres and decreased by 1 point each in 13 centres, while in the remaining 28 centres the index remained stationary. The maximum increase of 7 points in Goa centre is mainly due to the increase in prices of rice, fish fresh, poultry, goat meat, snack saltish and synthetic sarees.
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