25Feb2010
As per Economic Survey, the retail prices in the country are rising at a rate 10 times faster than the wholesale prices. The survey put at 1.6% WPI for 2009-10, against an inflation of 11.4% based on CPI.
The CPI-based inflation has been higher than that based on WPI for 4 consecutive years now, but the gap has been widening every passing year. In 2004-05, the CPI-based inflation was, in fact, lower than the WPI one and the two were equal in 2005-06. The recent period has witnessed significant divergence in WPI and CPI inflation rates, principally on account of the larger weights assigned to the food basket in the CPI and due to the fact that retail prices are sticky downwards.
The divergence between wholesale price inflation and retail inflation is due to higher weightage of food prices in consumer price indices. It reflects faster rise in the prices of food items. Food inflation stood at 17.58 per cent for the week ended February 13.
http://beta.profit.ndtv.com/news/show/retail-prices-rising-10-times-faster-than-wholesales-27606
