Recently it was reported in the media that the Food Inflation has reduced in India. It was reported that it has gone into negative. I am not an economist or an expert but I learn that the people (at least the media, TV anchors etc.) consider it a positive thing.
I actually stopped for a second to think; what does it mean to me? Does it mean that I have to pay less for the food items? Or does it mean something has become cheaper in my sector market? Well, this is winter season in India; and the few things which I know has become cheaper are seasonal vegetables and fruits.
How the Inflation Index is measured?
The inflation is measured in the world by different benchmarks.
Countries like USA, Japan and UK uses CPI i.e. Consumer Price Index to measure the inflation. On the other hand countries like India use WPI i.e. Wholesale Price Index to calculate the inflation.
The second thing which prompted me to find out was what food items are included when the country calculates the Food Inflation?
A check on the Ministry of Commerce and Industry websites shows very interesting facts. The big brother Wholesale Price Index has three sisters, which it calculates.
1. Primary Articles
2. Fuel, Power, Light and Lubricants
3. Manufactured Products
The #1 sister (Primary Article) has three children’s. This sister has around 15 to 20% weightage on the Wholesale Price Index
1. Primary Articles
a. Food Articles
b. Non-Food Articles
c. Minerals
The #2 sister (Fuel, Power, Light and Lubricants) has no children. This sister too has around 15 to 20% weightage on the Wholesale Price Index
The #3 sister (Manufactured Products) has twelve children’s. This is the most powerful sister as it has 60 to 70% weightage on the Wholesale Price Index.
…so coming back to my original interest that what food items are included in the Food Inflation calculation; here is the list of food items which have the privilege to impact our pockets and budgets
The list itself was very amazing; if you buy the “Mother Dairy” brand of milk you are buying something which can impact the country Food Inflation. But if you are buying Amul or Paras or Sudha brand of milk you are not impacting country food inflation. Similarly if you a vegetarian, you are not impacting the country Food Inflation bill but if you like to eat chicken, egg then you are buying something which can impact the Country’s Food Inflation
…Honestly, I do not understand all this but I personally feel that what the consumers can consume is the most powerful tool to measure such things. There are millions who do not have access to any such food item listed in the Food Inflation index.
Thanks for reading this post.
Reference: .
http://eaindustry.nic.in/report/ann4a.htm
