Sunday, Aug 07, 2022
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inflation: wpi

Their Precious Puzzles

WPI, the official barometer to measure inflation, doesn't reflect retail realities

Their Precious Puzzles
R. Prasad
Their Precious Puzzles
outlookindia.com
-0001-11-30T00:00:00+05:53


Inflation is one economic phenomenon that directly affects every citizen. Not surprisingly, politicians dread inflation, for it inevitably translates into popular resentment. Over the decades, the prices of sugar and onion have become symbols of voter anger against several incumbent regimes. So, when on June 22, 2007, Union finance minister P. Chidambaram—already under attack from his party colleagues, political opponents and Communist comrades for failing to rein in prices of essential products—commented on the annual rate of inflation, he was considerably circumspect.

While taking pride in saying that inflation, as measured by the official wholesale price index (WPI), had fallen to a 14-month low of 4.28 per cent, he said "monetary tightening measures seem to have had an impact". But he added gingerly, "I think it is too early to reach any conclusion. I have to watch what happens in the next 4-5 weeks". He didn't have to; he got the flak the next day itself.

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