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Critical Topics and Their Significance for the UPSC CSE Examination on October 15, 2024

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Sept. wholesale food prices leapt 9.5%

For Preliminary Examination: Current events of national and international importance

For Mains Examination: GS III - Indian Economy

Context:

Fuel, power costs slid over 4% last month, while manufactured product prices rose just 1%, reining in overall wholesale inflation pace to 1.84% from 1.3% in Aug.; most economists expect WPI to rise further in Oct. on West Asia crisis, food prices

Read about:

What is Consumer Price Index (CPI)?

What is Wholesale Price Index (WPI)?

Key takeaways:

• Inflation in India's wholesale prices increased to 1.84% in September, up from 1.31% in August. This rise was driven by food prices, which hit a two-year high of 9.5%, compared to August's ten-month low of 3.3%. Notably, vegetable prices surged nearly 49%, marking the steepest increase in 14 months.
• In September, prices for potatoes and onions rose by 78.1% and 78.8%, respectively, reflecting a significant acceleration from the previous month. Tomato prices surged by 74.5%, reversing a 53% drop seen in August. While inflation for fruits and pulses saw a slight decrease, it remained elevated at 12.2% and 13%, respectively.
• Cereal and paddy inflation dipped slightly to 8.1%, although wheat prices increased at a faster rate of 7.6% in September. Meanwhile, milk inflation eased to 3.2%, and prices for eggs, meat, and fish fell by 0.8%.
• Manufactured food products experienced a 5.5% inflation rate in September, while vegetable and animal oils and fats rose by 10.5%, albeit from a low base last year when prices had dropped for both categories.

Mild Increase

• Despite the rebound in food prices, the Wholesale Price Index (WPI) only showed a slight increase, as fuel and power prices fell over 4% compared to September 2023, and inflation for manufactured products eased to 1%.
• On a month-to-month basis, the WPI rose a modest 0.06%, with the food index recording the highest gain of 1.1%.
• Given the uptick in oil and commodity prices this month amid rising tensions in West Asia, along with expectations of continued elevated food prices, many economists anticipate further increases in the WPI for October.
• ICRA's chief economist, Aditi Nayar, projected that wholesale inflation could range between 2% and 2.5% in October. She added that if commodity prices rise further and geopolitical conflicts escalate, the latter half of 2024-25 could experience a more rapid increase in prices than expected

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