Lok Sabha Question No. 3149 (UNSTARRED), answered on 2018-01-05
Subject: Rise in Inflation
Ministry: FINANCE
Asked by: KAPIL MORESHWAR PATIL, V. SATHYABAMA, RAMSINH PATALYABHAI RATHWA, SADASHIV KISAN LOKHANDE

## Government of India Ministry of Finance Department of Economic Affairs

## LOK SABHA

## UNSTARRED QUESTION NO. 3149 TO BE ANSWERED ON JANUARY 5, 2018

## RISE IN INFLATION

† 3149. SHRI KAPIL MORESHWAR PATIL: SHRIMATI V. SATHYA BAMA: SHRI RAMSINH RATHWA: SHRI SADASHIV LOKHANDE:

Will the Minister of FINANCE be pleased to state:

- (a) whether the price of essential articles continued to rise during the last three years and the Wholesale Price Index (WPI) reached to double digit in December 2017;
- (b) if so, the details thereof and the rate of inflation for the last three months as per the Consumer Price Index (CPI);
- (c) whether inflation is being measured by the WPI instead of CPI and if so, the reasons therefor;
- (d) whether retail prices of essential articles including sugar, tea, pulses, cereals etc. have gone up steeply during the last few months in spite of WPI going down and if so, the details thereof along with the reasons for variation in the prices of said articles; and
- (e) the steps taken or proposed to be taken by the Union Government in co-ordination with various State Governments to control inflation?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI P. RADHAKRISHNAN)

- (a) & (b) Wholesale Price Index (WPI) for 22 essential commodities in the last three financial years i.e.  2014-15,  2015-16  and  2016-17  is  given  in  Table  1.  Inflation  based  on  WPI  for  the  month  of November 2017, the latest month for which information is available, is 3.9 per cent. Inflation based on the  Consumer  Price  Index  -  Combined  (CPI-C)  in  the  last  three  months  was  3.3  per  cent  in September 2017, 3.6 per cent in October 2017 and 4.9 per cent in November, 2017.

| Table 1: Wholesale Price Index (WPI) for 22 Essential Commodities (Base Year 2004-05)   | Table 1: Wholesale Price Index (WPI) for 22 Essential Commodities (Base Year 2004-05)   | Table 1: Wholesale Price Index (WPI) for 22 Essential Commodities (Base Year 2004-05)   | Table 1: Wholesale Price Index (WPI) for 22 Essential Commodities (Base Year 2004-05)   | Table 1: Wholesale Price Index (WPI) for 22 Essential Commodities (Base Year 2004-05)   |
|-----------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------|
| S.No.                                                                                   | Essential Commodity                                                                     | 2014-15                                                                                 | 2015-16                                                                                 | 2016-17                                                                                 |
| 1                                                                                       | Rice                                                                                    | 241.4                                                                                   | 237.4                                                                                   | 251.6                                                                                   |
| 2                                                                                       | Wheat                                                                                   | 211.7                                                                                   | 219.4                                                                                   | 241.7                                                                                   |
| 3                                                                                       | Gram                                                                                    | 198.0                                                                                   | 279.8                                                                                   | 441.7                                                                                   |
| 4                                                                                       | Arhar                                                                                   | 230.8                                                                                   | 357.9                                                                                   | 334.4                                                                                   |
| 5                                                                                       | Moong                                                                                   | 358.0                                                                                   | 404.5                                                                                   | 337.7                                                                                   |
| 6                                                                                       | Masur                                                                                   | 265.4                                                                                   | 337.2                                                                                   | 307.7                                                                                   |
| 7                                                                                       | Urad                                                                                    | 288.3                                                                                   | 438.0                                                                                   | 493.7                                                                                   |
| 8                                                                                       | Potato                                                                                  | 297.2                                                                                   | 164.1                                                                                   | 227.1                                                                                   |
| 9                                                                                       | Onion                                                                                   | 333.7                                                                                   | 447.3                                                                                   | 247.1                                                                                   |
| 10                                                                                      | Tomato                                                                                  | 314.2                                                                                   | 321.6                                                                                   | 236.9                                                                                   |
| 11                                                                                      | Milk                                                                                    | 242.6                                                                                   | 250.6                                                                                   | 259.9                                                                                   |

|   12 | Tea                    |   178.8 |   183.4 |   210.4 |
|------|------------------------|---------|---------|---------|
|   13 | Wheat Flour ( Atta)    |   206.2 |   202.2 |   228.7 |
|   14 | Sugar                  |   187.8 |   171.1 |   216.7 |
|   15 | Gur                    |   216.9 |   208   |   240.4 |
|   16 | Vanaspati              |   124   |   115.3 |   120.9 |
|   17 | Groundnut Oil          |   167.3 |   192.3 |   214.4 |
|   18 | Palm Oil               |   127.2 |   121.9 |   127.5 |
|   19 | Mustard & Rapeseed Oil |   157.5 |   180.4 |   182.5 |
|   20 | Soyabean Oil           |   153.5 |   148.8 |   156.7 |
|   21 | Sunflower Oil          |   124.9 |   131.1 |   133.5 |
|   22 | Salt                   |   197.3 |   201.5 |   198.1 |

Source: Office of the Economic Adviser, DIPP

- (c) Inflation is being measured by the WPI as well as CPI. However, the Government has fixed the inflation target (based on the Consumer Price Index -Combined) of 4 per cent with tolerance level of +/- 2 per cent for the period beginning from August 5, 2016 to March 31, 2021.
- (d) & (e) Inflation based on the CPI-C and the WPI for sugar, tea, pulses and cereals in the last three months has been presented in Table 2 below. The difference between the two measures of inflation is on account of the fact that the WPI measures change in the average prices of commodities traded at  wholesale  level,  whereas  the  change  in  prices  at  retail  level  is  captured  by  the  CPI.  The Government has taken various measures from time to time to stabilize prices of essential food items which,  inter-alia,  include  appropriately  utilizing  trade  and  fiscal  policy  instruments  like  import  and export  duty,  Minimum  Export  Price,  export  restrictions,  etc.  to  regulate  domestic  availability  and moderate  prices,  and  provision  of  higher  Minimum  Support  Prices  to  incentivize  farmers  for increasing  production.  Besides,  Government  is  also  implementing  Price  Stabilization  Fund  (PSF) scheme to help moderate the volatility in prices of agri-horticultural commodities like onion, pulses and potatoes.

| Table 2: Inflation based on CPI-C and WPI (in per cent)   | Table 2: Inflation based on CPI-C and WPI (in per cent)   | Table 2: Inflation based on CPI-C and WPI (in per cent)   | Table 2: Inflation based on CPI-C and WPI (in per cent)   | Table 2: Inflation based on CPI-C and WPI (in per cent)   | Table 2: Inflation based on CPI-C and WPI (in per cent)   | Table 2: Inflation based on CPI-C and WPI (in per cent)   | Table 2: Inflation based on CPI-C and WPI (in per cent)   | Table 2: Inflation based on CPI-C and WPI (in per cent)   |
|-----------------------------------------------------------|-----------------------------------------------------------|-----------------------------------------------------------|-----------------------------------------------------------|-----------------------------------------------------------|-----------------------------------------------------------|-----------------------------------------------------------|-----------------------------------------------------------|-----------------------------------------------------------|
|                                                           | CPI-C                                                     | CPI-C                                                     | CPI-C                                                     | CPI-C                                                     | WPI                                                       | WPI                                                       | WPI                                                       | WPI                                                       |
|                                                           | Cereals and products                                      | Pulses and products                                       | Tea: leaf                                                 | Sugar *                                                   | Cereals                                                   | Pulses                                                    | Tea                                                       | Sugar                                                     |
| Sep-17                                                    | 3.7                                                       | -22.5                                                     | 2.0                                                       | 6.6                                                       | -0.1                                                      | -24.3                                                     | -                                                         | 7.4                                                       |
| Oct-17                                                    | 3.7                                                       | -23.1                                                     | 1.7                                                       | 6.5                                                       | -0.1                                                      | -31.1                                                     | 11.5 -7.2                                                 | 5.1                                                       |
| Nov-17                                                    | 3.3                                                       | -23.5                                                     | 2.1                                                       | 6.3                                                       | -2.1                                                      | -35.5                                                     | -8.0                                                      | 4.3                                                       |

Note: CPI-C figures for last one month and WPI figures for the last two months are provisional;

* Sugar (Non PDS only)

Source: CSO for CPI-C and OEA, DIPP for WPI

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