APRIL 2022 - MONTHLY REPORT

                  Inflation Rate in India: December 2022

 

          Inflation is crucial to determine one’s purchasing power. In other words, inflation is a measure that causes the prices of both goods and services to rise over time and buyers will feel the pinch as it affects their personal finance, particularly spending and buying habits. 

           Any factor that causes prices of goods and services to rise in the market and create instability in consumption lead to inflation. Economists suggest that achieving inflation that’s moderate enough to drive consumption will create a baseline of growth in the economy. However, high inflation indicates that an economy is facing serious troubles; whereas, low inflation, a.k.a. deflation is equally worrisome.

How to Calculate Inflation Rate In India?

           There are two indices that are used to measure inflation in India — the consumer price index (CPI) and the wholesale price index (WPI).

          The CPI, which refers to the Consumer Price Index, analyzes the retail inflation of goods and services in the economy across 260 commodities. The CPI-based retail inflation considers the change in prices at which the consumers buy goods. The data is collected separately by the Ministry of Statistics and Program Implementation and the Ministry of Labour. 

        The WPI, which refers to the Wholesale Price Index, analyzes the inflation of only goods across 697 commodities. The WPI-based wholesale inflation considers the change in prices at which consumers buy goods at a wholesale price or in bulk from factory, mandis, etc.

Average Inflation Rate in India

         The country’s retail inflation, which is measured by the Consumer Price Index (CPI), dropped to a three-month low of 6.77% in Oct. 2022. CPI in the month of September was 7.41% and 7% in Aug 2022. Meanwhile, the provisional data on Wholesale price index (WPI)-based inflation eased to 8.39%, from 10.7% the month before. Compared to inflation 10 years back, or in Oct. 2012, CPI is down 2.98% and WPI is up 0.94%.

            The RBI has maintained its retail inflation projection at 6.7% in 2022-23, and real GDP growth projection at 7% for the same period. The central bank aims to achieve the medium-term target for CPI inflation of 4% within a band of +/- 2%, while supporting growth. 

Average Inflation Rate in India Last 10 Years

              Here’s a list of the country’s inflation as measured in both CPI and WPI indices to help you understand the change in price over time.

Year		Indices		Dec		Nov	Oct		Sep		Aug		Jul	Jun		May		Apr		Mar		Feb		Jan
2022		CPI		-		-	6.77%		7.41%		7%		6.71%	7.01%		7.04%		7.79%		6.95%		6.07%		6.01%
		WPI		-		-	8.39%		10.70%		12.41%		13.93%	15.18%		15.88%		15.08%		14.55%		13.11%		12.96%
2021		CPI		5.59%		4.91%	4.48%		4.35%		5.30%		5.59%	6.26%		6.30%		4.23%		5.52%		5.03%		4.06%
		WPI		14.27%		14.23%	12.54%		10.66%		11.39%		11.16%	12.07%		12.94%		10.49%		7.39%		4.83%		2.03%
2020		CPI		4.59%		6.93%	7.61%		7.27%		6.69%		6.73%	6.26%		*		*		5.84%		6.58%		7.59%
		WPI		1.95%		1.55%	1.31%		1.32%		0.16%		-0.58%	1.81%		-3.37%		-1.57%		1.00%		2.26%		3.01%
(* The Government of India did not release the retail inflation data, which is calculated on the basis of CPI, for April and May 2020, due to nationwide lockdown induced by the Covid-19 pandemic.)
Year	Indices		Dec		Nov			Oct		Sep		Aug			Jul		Jun		May		Apr		Mar		Feb		Jan
2019	CPI		7.35%		5.54%			4.62%		3.99%		3.28%			3.15%		3.18%		3%		2.92%		2.86%		2.57%		7.59%
	WPI		2.59%		0.58%			0.16%		0.33%		1.08%			1.08%		2.02%		2.45%		3.07%		3.18%		2.93%		2.76%
2018	CPI		2.19%		2.33%			3.31%		3.77%		3.69%			4.17%		5%		4.87%		4.58%		4.28%		4.44%		5.07%
	WPI		3.80%		4.64%			5.28%		5.13%		4.53%			5.09%		5.77%		4.43%		3.18%		2.47%		2.48%		2.84%
2012	CPI		10.56%		9.90%			9.75%		9.73%		10.03%			9.86%		9.93%		10.36%		10.26%		9.47%		8.83%		7.65%
	WPI		7.18%		7.24%			7.45%		7.81%		7.55%			6.87%		7.25%		7.55%		7.23%		6.89%		7.36%		6.55%

Latest Inflation News in India

           The CPI inflation has dropped to a three-month low of 6.77% in Oct. 2022. Whereas, WPI-based inflation rate, after remaining above 10% for the previous 1.5 years, plunged to a 19-month low of 8.39% in the same period. The RBI had estimated the country’s inflation to be lower than 7% in Oct. 2022.

         However, the Indian market remained largely unaffected. Stock market indices slid marginally with the BSE  S&P  Sensex falling 0.28% while the NIFTY 50 closed at 18329.15, 0.11%   lower for the day. 

                The RBI while announcing the repo rate hike for the fourth time by 50 bps to 5.9% in Sept, the central bank had blamed effects of the pandemic, the geo-political conflict, and the weakness in the Indian rupee manifesting in the demand-supply mismatch of goods and services, leading to downside risks to growth. Inflation has found mention in the RBI’s monetary policy committee’s reviews repeatedly as among the reasons for rate increases. 

   To Beat Inflation?

         The government, in the past, has announced a series of measures to ease inflation — cut the excise duty on petrol and diesel, reduce import duty on key raw materials and crude edible oils, to name a few.

           On the other hand, one way the RBI tries to control inflation is by increasing the repo rate (the rate of interest or cost levied upon public and private banks for borrowing money from the apex bank), in order to control and supply and demand of goods and services. Simultaneously, the increase in repo rates compels banks to increase interest rates on loans and deposit rates.

         Hence, Choosing the right investment instrument is the one way to remain financially safe, which not only suits the personal finance needs given the risk willing to take, but also allows the savings to grow enough to beat inflation.