July WPI may rise to 4.94% vs 4.86% in June: CNBC-TV18 Poll

The July wholesale price index (WPI) inflation data that will be released today is seen rising to 4.94 percent versus 4.86 percent month on month according to a CNBC-TV18 poll.

CNBC-TV18's Latha Venkatesh reports the rise in the data could be due to a continued uptick in food prices. Petrol price was raised by Rs 2 and diesel by Re 1 in the fortnight. A surge was also seen in the ATF prices, so the fuel index will definitely be higher. Fuel and power inflation is likely to come in at about 7.12 percent and food inflation at 9.74 percent. These are the internals that will push up the inflation number to 4.94 percent. The bigger worry or bigger number that the market will be looking at is the core inflation. In the last month itself it had fallen to 2 percent. One only hopes that it doesn’t worsen further. The lower it gets, the more one knows that producers will not even have the incentive to produce if the inflation level falls to something like 2 percent and if year-to-date prices would have even gone lower. Why would a manufacturer produce if prices would actually lower at the end of the production cycle? So, it is actually getting into deflationary territory and that could be a worry. However, this is not going to have much of an impact on monetary policy as we know for the past month it has been guided only by the value of the rupee. So, it is important as an indication of how poor is the producer pricing power and the general level of inflation in the economy is, but it is not market moving in terms of having an impact on policy.