Context:

• India’s retail inflation eased to 5.02% in September on an annual basis as against 6.83% in August, showed data released by the Ministry of Statistics.

Inflation: CPI and WPI as Key Indicators

• Definition: According to the International Monetary Fund, inflation measures how much more expensive a set of goods and services has become over a certain period, usually a year.
• Indicators: The two main indicators of inflation in India are the wholesale price index (Wpi) and the consumer price index (cpi). India uses CPI to measure inflation.
  • Retail Inflation: CPI tracks retail inflation which measures the changes in prices from a retail buyer’s perspective.
• Controlling inflation: RBI acts to control retail inflation through its monetary policies while the government does that by using fiscal policy instruments like regulating its expenditure through governance, infrastructure development etc.

Retail Inflation: Key Findings

• Food Price Inflation: For September stood at 6.56% as 9.94%  in August. 
• Rural and Urban Inflation: Stood at 5.33% and 4.65%, respectively.
• Fuel and Light Segment: Deflated 0.11% in September. 
• CPI Inflation: RBI projected it will ease from 6.6% in the September quarter to 5.5% in the December quarter. 
  • RBI has set its 2024-25 CPI target at 4.5 per cent, which remains above the mandated target of 4 per cent.
• Core Inflation (CPI excluding food and fuel): Stood at 4.9% for the September quarter. 
• Reasons for Decreasing Inflation: Falling prices of vegetables along with cost reduction in housing, clothing, non-essential commodities etc.
• Uncertainty: Israel-Hamas conflict, fall in kharif sowing for key crops like pulses and oilseeds, low reservoir levels, and volatile global food and energy prices. 

News Source: Economic Times