Moneycontrol
Feb 15, 2018 03:33 PM IST | Source: Moneycontrol.com

WPI inflation eases to 6-month low of 2.84% in January

Onions continued to remain expensive with wholesale prices growing nearly 194 percent in January as compared with a contraction (-) 36.08 percent during the same period a year ago


India's wholesale inflation eased for the second consecutive month, growing at 2.84 percent in January even as food, vegetable and fuel prices continued to witness an uptrend, latest price data released by the commerce ministry showed today.

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

WPI witnessed a growth of 3.58 percent in December after hitting an eight-month high of 3.93 percent in November.

Primary articles, which accounts for more than a fifth of the entire wholesale price index grew 2.37 percent in January from 1.93 percent year a percent ago and 3.86 percent in December.

Latest price data shows that among primary articles, food prices, especially vegetables, potatoes, onions, eggs, milk and fruits continued to rise, while prices wheat and pulses continued to fall compared to last year.

“The WPI inflation for January 2018 printed considerably lower than expected, led by a sharp dip in the food inflation driven by vegetables, pulses and sugar, and a base effect led moderation in the rate for fuel and power,” Aditi Nayar, Principal Economist at ICRA said.

“However, higher commodity prices and a seasonal reset of prices at the beginning of the year, resulted in a considerable uptick in the core inflation,” Nayar said.

Prices of vegetables eased in January, growing 40.77 percent as compared with a growth of 56.46 percent in December and a negative growth of (-) 23.49 percent in January, 2017.

However, price of onion—a key ingredient used in Indian kitchen—continued to remain expensive for the common man as it grew nearly 194 percent in January as compared with a contraction (-) 36.08 percent during the same period a year ago.

Surging onion prices has pushed up kitchen budgets. Unseasonal rains have affected supplies of the summer-sown (kharif) onion crop this year, pushing up retail prices.

Potato prices rose for the first time after witnessing a negative growth for around a year. It grew at 8.68 percent in January as compared with (-) 16.67 percent decline a year ago.

As announced in Union Budget 2018, the government is planning to create a sustainable roadmap to ensure that tomato, onions and potatoes (TOP) are available in every corner of the country, with any price volatility. The move is likely to help farmers’ come out of the current agrarian distress.

Prices of non-food articles fell (-) 1.23 percent in January, compared with 0.74 percent a year ago and (-) 0.34 percent in December, while fuel and power inflation stood at 4.08 percent as against 16.67 percent last year and 9.16 percent in December.

The rate of increase in petrol prices also declined at it grew at 1.2 percent in January from 8.8 percent in December.

Prices of pulses continued to slump for close to a year now at xx percent.

Last week, data released by government showed that retail inflation witnessed a similar trend. India’s retail inflation marginally slowed to 5.07 percent in January, as prices of fruits, vegetables and oil prices slightly eased.

Inflation numbers are crucial as higher-than-expected price rise give lesser room for a rate cut by the central bank to boost investment and accelerate growth in the broader economy that has shown signs of revival in the last few months.
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