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Last Updated : Dec 14, 2018 01:44 PM IST | Source: Moneycontrol.com

Wholesale inflation eases to 4.64% in November on cheaper food prices

The WPI is a marker for price movements in bulk buys for traders and broadly mirrors trends in shop-end prices

Wholesale prices in India rose 4.64 percent in November, compared to a 5.28 percent rise in October, due to lower food and vegetables prices, data released by the Commerce and Industry Ministry showed.

The WPI is a marker for price movements in bulk buys for traders and broadly mirrors trends in shop-end prices.

 

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Prices of primary articles — including food articles — which account for more than a fifth of the entire wholesale price index, rose 0.88 percent in the month under review, as against 1.79 percent in October.

Prices of pulses, vegetables and onion continued to witness negative growth, although the pace of recession was lower.

"The recent trend of a year-on-year correction in food prices does not augur well for the strength of rural demand in the immediate term. However, factors such as weak post-monsoon rainfall and a delay in rabi sowing pose some uncertainty regarding how long food prices would remain in the disinflation zone," said Aditi Nayar, Principal Economist at ICRA said.

Potatoes continued to remain expensive, with their prices rising 86.45 percent in November, as against 93.65 percent in October. Similarly, wheat prices, which continued to show a similar trend, rose 9.18 percent in November, as against 9.49 percent in October.

Prices of cereals rose 7.23 percent, as against 6.24 percent in the previous month, indicating some impact of Minimum Support Price (MSP) on crop prices.

“The easing of the WPI inflation in November was led by a deeper disinflation in prices of primary food articles, easing of inflation related to crude petroleum and mineral oils following the correction in retail fuel prices, and some impact of the appreciation in the rupee on the landed prices of imports,” Nayar said.

Prices of fuel and power, which together have a weightage of 13.15 percent on the WPI, grew at 16.28 percent in November, as against a rise of 18.44 percent in October.

Any rise in prices of crude oil directly impacts inflation in India as the country meets most of its domestic demand for the commodity by importing it.

Any rise in prices of crude oil directly impacts inflation in India as the country meets most of its domestic demand for the commodity by importing it.

The recent depreciation in the value of the rupee had become a matter of concern as it was adding to India's fiscal woes by increasing its import bill.

However, a sharp correction in global crude oil prices to below $60 per barrel, as well as a more stable domestic currency, have eased concerns about higher inflation.

Prices of manufactured products, which account for close to two-thirds of the index, rose 4.21 percent, compared to 4.49 percent in October.

Core WPI inflation fell to 4.8 percent from 5.1 percent in the previous month.

"Partly reflecting the rebound in the rupee as well as a favourable base effect, the core WPI inflation eased to 4.9% in November 2018…Given the recent stability in the crude oil prices and the INR, we expect the WPI inflation to range between 3.7-4.4 percent in the remainder of H2 FY2019," Nayar said.

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First Published on Dec 14, 2018 12:10 pm
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