The wholesale price-based inflation continued its negative trend for the fourth consecutive month in July, reaching (-) 1.36%. While fuel prices eased, food article costs rose, causing inflation in this category to surge by 14.2%. Inflation rates for other sectors, such as manufactured products, also showed declines. The Reserve Bank of India (RBI) held its interest rates steady at 6.5% in response to uncertain inflation levels, signaling potential tightening policies due to rising food prices. The RBI revised its inflation projection for the fiscal year, citing pressures from food costs, while awaiting consumer price index data for a comprehensive outlook.
Prelims pointer
- Wholesale Price Index (WPI): A measure of the average change in the prices received by producers for goods at various stages of production; used to gauge inflation in the wholesale sector.
- Inflation: The rate at which the general level of prices for goods and services rises, leading to a decrease in purchasing power.
- RBI Governor: The head of the Reserve Bank of India, responsible for setting monetary policies to control inflation and ensure economic stability.
- Interest Rates: The cost of borrowing money, set by central banks like the RBI, to influence economic activities and manage inflation.
- Consumer Price Index (CPI): A measure that examines the average change in prices paid by consumers for various goods and services; used to evaluate retail inflation and its impact on consumers’ purchasing power.
