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Last Updated : Nov 14, 2017 01:39 PM IST | Source: Moneycontrol.com

India’s wholesale inflation hardens to six-month high of 3.59% in October

Wholesale inflation rate, measured by WPI, is a marker for price movements in bulk buys for traders and broadly mirrors trends in shop-end prices.

India's wholesale inflation grew to 3.59 percent, hitting a six-month high in October, due to increase in prices of food and fuel products

Wholesale inflation rate, measured by WPI, is a marker for price movements in bulk buys for traders and broadly mirrors trends in shop-end prices.

WPI recorded 2.6 percent jump in September and 1.27 percent in October, a year ago.

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Latest price data released by the commerce ministry today showed that WPI Food Index, comprising food articles from primary and manufactured products' group grew 3.23 percent in October from 1.99 percent in September.

Food prices, especially wheat, pulses, potatoes, oilseeds and fibres continued to fall. However, vegetable and prices of onion—a key ingredient used in Indian kitchen--more than doubled in October as compared with a contraction (-)72 percent during the same period a year ago.

"The broad-based and rather unseasonal spike in vegetable prices was the chief factor that pushed up the primary food inflation to 4.3% in October," ICRA's Principal Economist Aditi Nayar said.

Vegetable prices grew nearly 37 percent in October from 15.48 percent in September, while falling 11.84 percent a year ago. Prices of pulses continued to slump for close to a year now at 31 percent.

Fuel and power inflation, which has a weightage of 13.15 percent in WPI, stood at 11.81 percent in October, compared with 13. 15 percent in September and 5.16 percent a year ago. Petrol prices grew 17.91 percent in October from 15.79 percent in September, versus a 6.08 percent growth a year ago, with liquefied petroleum gas (LPG) prices witnessing 18.17 percent jump from nearly 21 percent rise in September.

Primary articles, which accounts for more than a fifth of the entire wholesale price index accelerated 3.33 percent in October from 0.15 percent in September and 2.14 percent a year ago.

Manufactured products’ that account for close to two-third of the index grew 2.55 percent in October, remaining almost flat, with a 2.36 percent jump a year ago.

"The further spike in global crude oil prices as well as domestic vegetable prices, would keep the WPI inflation firm in November 2017. While the CPI and the WPI inflation converged in October 2017, this is likely to be temporary, with retail inflation expected to record a sharper hardening in the remainder of FY2018 (November-March)," Nayar said.

On Monday, data released by the government showed that retail inflation accelerated 3.28 percent, hitting a seven-month high in October, due to rise in fuel and consumer food prices.

Earlier during the month, the Central Bank’s Monetary Policy Committee (MPC) forecasted that retail inflation will hover around 4.2-4.6 percent between October-March this year, higher than the previous projection of 4-4.5 percent. The inflation rate is still below the apex bank's medium-term target of 4 percent.

"The sharper-than-anticipated uptick in the WPI inflation reinforces our expectation of a status quo in the upcoming monetary policy review," she said.

 

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First Published on Nov 14, 2017 12:16 pm
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