The Wholesale Price Index (WPI) is down, yet it is too early to celebrate. For, the consumer price inflation index (CPI), which captures the rise in cost of living, jumped 9.5 per cent in March 2012 over a year ago.
That's up from 8.8 per cent in February and far higher than the 6.9 per cent increase suggested by the WPI.
The WPI captures price trends at the wholesale level and not at the counter. Nor does it include the cost you would incur on such services as medical care or education.
What costs more?
As a consumer, you would have paid 15 per cent more for milk and milk products, 14 per cent more on your house rent and 14 per cent more on oils and fats in March 2012 than you did a year ago. Fuel and electricity cost 12 per cent more now.
Avid shoppers clearly were not spared. Clothes and footwear too became costlier by 12.5 per cent. If you do not cook your meals but buy them, then you would have paid 9.2 per cent more for ‘prepared meals' in the last one year.
The CPI data is based on the new index launched by the Central Statistical Organisation a year ago. It covers more regions and goods and services than the earlier index released by the Labour Bureau. The index provides State-wise inflation for urban and rural regions too.
Regional inflation
The new index shows that a third of the 35 States saw double-digit inflation of 10-13 per cent. Chandigarh, Gujarat, Karnataka, Delhi and Tamil Nadu, Rajasthan, Madhya Pradesh and Uttarakhand were among the more expensive States to live in.
In contrast, those living in Haryana, Jharkhand, Odisha and Kerala had to contend only with a modest price rise of 7-8 per cent.
Urban India, that is the urban regions in these States put together, saw double-digit price rise of 10.3 per cent over the last year, while Rural India inflation was 8.8 per cent.
The prices of food items such as milk, cereals, pulses, sugar and fruits rose more in Rural India than in the cities, while Urban India was hurt more by vegetable price hikes.
Rural India, in fact, saw the prices of certain food items overtake those in the cities. This trend was visible in the 2011 Labour Bureau price data of certain consumer items. For instance, as of December 2011, the price of groundnut oil in Ahmedabad was Rs 84 a litre while it was Rs 105 a litre in Rajkot.
Similarly, vanaspati was Rs 75 a litre in Guwahati while it was Rs 94 in Mariani, Jorhat another town in Assam. Of course, the higher cost incurred for goods to reach smaller towns also adds to the price.
Keeping up
For consumers to keep up with higher prices, their pay or dearness allowance has to make up for the higher cost of living.
But dearness allowance for government employees is currently based on the old consumer index for industrial workers. The inflation numbers according to the old index are lower than those displayed by the new index.