Mumbai: Wholesale price index (WPI)-based inflation came in below 1%, aided by disinflation in food and minerals, falling for the fourth month in a row. Although consumer price index (CPI)-based inflation is the anchor for the central bank’s policy decisions, WPI is used for accurately measuring gross domestic output without the impact of inflation. The WPI food index, which roughly has 25% weightage, decreased from 0.15% in May to -1.25% in June. It also excluded excise duty while computing WPI to insulate it from changes in fiscal policy such as implementation of GST. As a result, both WPI and CPI can been seen converging towards each other, which is a good indicator for policy makers.

Source: Mint July 14, 2017 07:02 UTC