Mosquito bites swell up and itch. So do inflation bites. But when the political environment is charged, some describe this swelling and itching with exaggeration while others pretend as if there is no swelling or itching at all.
Let the facts speak for themselves.
In September 2017, annualised inflation measured by the Wholesale Price Index or WPI stood at 1.6 per cent: the number shot up to 9.2pc in September 2018. And before that, in July and August, the number was even higher — 10.5pc and 11pc, respectively. So it just moderated somewhat in September.
Aggregate demand is still high as the purchasing capacity of a segment of the population in the economy is still intact
In all likelihood, October data will not show much respite as the recent increase in gas prices may have a considerable impact on wholesale or ex-factory prices of locally produced items of agricultural, industrial and commercial use.
But why look at the WPI?
A sharper increase in the WPI often pushes up the Consumer Price Index (CPI), which measures overall inflation, and the Sensitive Price Index, which reflects inflation for the poor. Periodic deviations from this rule of thumb are possible and have even been recorded. But a sustained hike in the WPI for a considerable period — say, a full fiscal year — does not spare the CPI and SPI movement. Both are affected accordingly.
SPI inflation for the week ending on Oct 11 recorded an annualised increase of 6.52pc. Prices of 19 out of 53 essential items of daily use showed a rising trend. These include gas charges, LPG cylinders, cooking oil and vegetable ghee, chicken and eggs, wheat and wheat flour, Irri-6 and broken basmati rice, sugar, gur and red chillies etc.
People of least financial resources use these and similar items and are affected when their prices move up.
CPI inflation showed an average year-on-year increase of 5.12pc. In addition to the above-mentioned foodstuff, many more items in the CPI basket, including milk, meat and fish and pulses, depicted a rising trend.