CURRENT AFFAIRS | MAY 15, 2026
India’s Wholesale Price Index (WPI) surged 8.3% year-on-year in April 2026, the steepest jump in 42 months, according to Commerce Ministry data released on May 14. Energy items led the spike: crude oil rose ~12%, LPG 10%, ATF 12.5%, plastic tape 12%, aluminium foil 7%, accounting for nearly three-fourths of the rise. CPI inflation also edged up to 3.48% in April from 3.4% in March. The principal trigger is the ongoing West Asia war, which has disrupted shipping through the Strait of Hormuz since the April 17-18 attacks. Economist Madan Sabnavis (Bank of Baroda) and Rajani Sinha (CareEdge) warned of “second-round effects” as producers pass input costs to consumers, threatening the RBI‘s 4% CPI target under Section 45ZA of the RBI Act.
Constitutional & Legal Framework
- RBI Act, 1934, Section 45ZA — Central Govt, in consultation with RBI, sets the inflation target every 5 years (currently 4% CPI +/- 2%).
- Section 45ZB — constitutes the 6-member Monetary Policy Committee (MPC): 3 RBI members (Governor, Deputy Governor i/c monetary policy, RBI nominee) + 3 Govt nominees.
- Flexible Inflation Targeting (FIT) framework adopted in 2016 via amendment to the RBI Act.
- WPI compiled by the Office of Economic Adviser, DPIIT, Ministry of Commerce & Industry; base year 2011-12 (revised in May 2017 from 2004-05).
- CPI released by the National Statistical Office (NSO) under MoSPI; base year 2012.
Why It Matters for CLAT 2027
- Passage angle: Inflation-targeting mandate, RBI autonomy, and MPC composition are recurring CLAT comprehension themes.
- WPI vs CPI distinction: WPI is NOT the official target; only CPI is. WPI signals transmit to CPI via the input-cost channel.
- Transmission mechanism doctrine: “Second-round effects” framework explains how producer prices feed through to consumer inflation.
- Geopolitics-economics linkage: West Asia war and Hormuz disruption show how external shocks shape monetary policy.
Key Facts to Memorise
- April 2026 WPI: 8.3% y-o-y (42-month high).
- April 2026 CPI: 3.48% (vs 3.4% in March).
- Inflation Target: 4% CPI +/- 2% band.
- MPC: 6 members, votes 1/member; Governor has casting vote on tie.
- Policy rates: Repo, Reverse Repo (under LAF), MSF, Bank Rate, SDF.
- WPI base year: 2011-12. CPI base year: 2012.
- FIT framework: Adopted 2016; first target set 2016-21, renewed 2021-26.
Mnemonic / Quick Recall
“WPI = WhoPaysIndustry, CPI = ConsumerPaysIndia” — WPI tracks producer-stage prices (NOT the RBI target); CPI tracks retail and IS the official 4% target. MPC = 3+3 = 6 members under 45ZB.
Sources: Indian Express p.13 (15 May 2026); Commerce Ministry WPI release; Bank of Baroda & CareEdge commentary.
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