Decline in food, fuel prices keep WPI inflation negative for 2nd month in row
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Time of India
5 hours ago
- Time of India
Probability of another 25bps rate cut by October rises: Puneet Pal
Synopsis Indian bond yields remained high, with the 10-year segment underperforming. CPI inflation fell to 2.10%, driven by lower food prices, raising hopes for RBI rate cuts. WPI inflation also slowed. Exports to the US increased, but overall exports were flat. A potential US tariff on Indian imports could impact GDP. The fiscal deficit stood at 18% in Q1FY26.
Time of India
10 hours ago
- Time of India
Inflation at 1.55%, but is it time to relax? Why you should plan for your real cost of living, and not trust headline inflation rate
Joydeep has over 25 years of experience in the financial services industry in roles spanning research and advisory. Currently he is on his own, working as a corporate trainer. He has authored four books on fixed income investing and wealth management, which have received accolades from the fraternity. Joydeep writes columns regularly in various financial publications. He is a thought leader in fixed income investing. He runs his own portal Worried about inflation eating into your savings? While official CPI data suggests a moderate 1.55% in July 2025, it's crucial to understand its limitations. The 'base effect' and a generic consumption basket may not accurately reflect your personal inflation rate. This is why you should reach out to a financial planner to help incorporate inflation-related nuances in your financial planning. Tired of too many ads? Remove Ads How is inflation calculated? Tired of too many ads? Remove Ads How should you measure? Professional guidance (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of .) You have heard that inflation reduces the purchasing power of money, which implies you require more money to buy the same amount of goods or services in the future. This is an age-old truth and will remain true in the future as well. Today, we will provide you with some food for thought on how to view gauge inflation, we examine the data reported by the government. The most widely used gauge is consumer price inflation (CPI). Another metric is wholesale price inflation (WPI). We will discuss CPI, as the Reserve Bank of India uses it for policy formulation. The latest declared data is for July 2025, which is 1.55%. With the inflation rate having eased to only 1.55%, does it mean you would inflate your expenses by a more benign number than you thought of earlier? Not examine how inflation is measured and assess the relevance of the data. The rate of price increase is calculated for a defined basket of goods and services. The starting point of the series, which dates back many years to 2012, is set at 100. Over the years, as prices went on increasing, the value of the index increased as well. Currently, the index value is 196.0 in July 2025. Inflation is measured year-on-year: i.e. for July 2025, the index is compared with that of July 2024, which was 193.0, and the outcome is 1.55%. The percentage rise in the index over the course of one year is what is announced, and we react to is a flaw in this method, followed not just in India but all over the world. In this year-on-year computation, the price level of the previous year has a significant impact on the inflation data. Intuitively, when we think of inflation, we think of an increase in current prices. That is, of course, relevant, but the price level of the previous year is as applicable in determining the outcome, e.g., 1.55% in July 2025. This is known as the base effect, where the base (denominator in the equation) influences the data. If inflation was higher in the previous year, and consequently the inflation index was higher, inflation this year is that much lower. And vice other issue is the composition of the basket. Almost half the CPI measurement basket comprises food or food-related items. This would be true for some people who are just above the subsistence level. People who are in a position to save and invest a chunk of their earnings would not need to spend as much on food. The broad issue is that there is only one basket for measurement nationwide. However, the consumption basket of all the 144 crore people of the country is different. It is not possible to have multiple baskets across the country; there are none anywhere in the world. Hence, the available inflation data is the nearest proxy for gauging and incorporating into your financial you look at your consumption basket and measure inflation accordingly. However, it is practically difficult, near-impossible, for individuals to do it consistently. One approach could be to consider the goal you are saving and investing the goal is a child's education abroad, that inflation would be different from the inflation of vegetables in India, a significant variable in the CPI basket. When considering a purchase, such as a house or a car, you can evaluate it accordingly. If you can gather working data on the item you are looking at, you are better off than looking at the generic CPI data of a government-decided with the available data, it is possible to avoid the base-effect flaw by looking at a longer period. As an example, the CPI index was 194.2 in June 2025; the data is available on the website Five years ago, in June 2020, it was 151.8 and ten years ago, it was 123.6. The compound annualised growth rate (CAGR) inflation over five years is 5.05% and over ten years is 4.6%.When formulating your financial plan, it is advisable to seek professional input. If you are doing it yourself, even if you are savvy, you may miss out on specific nuances. An experienced financial planner can guide you adroitly. You must ask your financial adviser the right questions, not only about the expected returns on your the current context, inflation can be managed in tandem with your planner. You can form a rough estimate of your consumption, e.g., X% on food, Y% on education, or Z% on discretionary consumption. Accordingly, you can discuss with your planner the basis for the assumed rate of inflation for your expenses five or ten years from is not under your control. You need not fret over it or plan your consumption basket around it. You are earning, saving, and investing for a reason. Your finances should not go haywire due to deficient planning. Inflation is a cog in this wheel; put the best estimate in your Excel spreadsheet.
Hans India
3 days ago
- Hans India
Centre to update WPI, IIP; announces launch of new Producer Price Index
New Delhi: The Centre announced that a nationwide survey will be done to update the country's Wholesale Price Index (WPI), introduce a Producer Price Index (PPI), and revise the Index of Industrial Production (IIP) to the 2022-23 base year. The move aims to make inflation and industrial output measures more representative of today's manufacturing sector. The WPI tracks price changes of goods at the wholesale level, focussing on bulk transactions between businesses. The current base year, 2011-12, is outdated due to significant economic changes over the past decade. PPI tracks prices received by service providers or manufacturers before their goods reach the wholesale market. IIP measures industrial output in sectors like manufacturing, mining, and electricity. Revision of its base year will ensure it reflects current industrial activity, addressing outdated production patterns in the 2011-12 base year. The Ministry of Commerce and Industry announced that the exercise will start in the month of August, and data for the new series will be compiled from April 2022. As the manufacturing sector has evolved significantly in the past decade, key economic indicators may become outdated without an update. Analysts say that this step will help India align with international statistical standards. The National Statistical Office's Field Operations Division is authorised to survey the Collection of Statistics Act. As many as 26 Statistics Officers will lead regional offices, supported by officials authorised to inspect GST invoices, e-way bills, balance sheets, and other records to verify submissions. 'The drive will cover all states and union territories, targeting organised manufacturing establishments engaged in activities such as manufacturing, repair, gas, water supply, and cold storage,' an official release said. Owners or managers of factories or establishments registered under laws such as the Factories Act, Companies Act, Shops and Commercial Establishments Act, and other statutory bodies can be asked to provide data. If separate details for each unit are unavailable, combined information for all units under the same management in a state or union territory can be submitted. Statistics Officers can give respondents up to a month, or a period deemed suitable, to submit information, including via an online portal. Enforcement provisions include adjudicating officers who can impose penalties for non-compliance, and an appellate authority for grievance redressal. The data will be processed by the Office of the Economic Adviser in the Department for Promotion of Industry and Internal Trade (DPIIT).
