Edit this post1. The concept of inflation based on wholesale price index is a method of fooling the general public as they are least impacted by the so called deflation i.e. inflation falling below zero percentage. It is fooling the general public by saying that inflation has fallen to Zero or below that as masses are effected by items of mass consumption.
2. Thus a new index should be worked out which is based on essential commodities prices and should also include the cost of transportation, communication, rent, electricity charges, internet cost, telephone cost, LPG cost, education cost, healthcare cost, insurance cost, clothing, vegetable and miscellaneous grocery items, petrol and diesel cost etc. Such type of an index will represent the real cost of living and will determine whether the inflation has fallen or gone up.
3. Nonetheless inflation falling to zero is also not good for economy as people will not spend as they will perceive the rates will fall further and thus will pend their purchases and thus deflation will have a negative monster face to be tackled. The point to note here is that inflation figures have fallen due to higher statistical base seen in corresponding week of 2008 and thus in subsequent weeks the inflation will come down further on the same reasons.
4. Thus one should not be fooled by these numbers and must demand for an index which really projects the inflation in real sense.
