WPI inflation rises to near two-year high of 3.55%

Moneycontrol BureauWholesale price index (WPI) inflation climbs to a near two-year high at 3.55 percent as against 1.62 percent month-on-month. Industrial inflation climbed to 1.8 percent from 1.17 percent last month. May WPI inflation has been revised to 1.24 percent from 0.79 percent. Food Inflation too increased to 11.82 percent from 8.18 percent last month. The vegetable inflation accelerated to 28 percent from 16.9 percent in June while the pulses inflation has gone upto 35.76 percent from 26.61 percent. While the high food inflation is worrisome, the positive takeaway is waning deflation, which was visible in the same month last year. The news is not a big positive for manufacturers as pricing power is yet to return completely, says Rupa Rege-Nitsure, Chief Economist at L&T Finance Holdings. However, she adds: “Select sectors, where there is some kind of revival of demand, pricing power must have definitely improved.” Rege Nitsure is hopeful of equal distribution of pricing power across the segments. Increased contribution of manufacturing products will need to be watched carefully in second half of the year as impacts of 7th Pay Commission as well as rising rural demand are yet to be seen, she adds. Below is the complete list:Primary articles inflation at 9.38% vs 5.5% (M-o-M)Food articles inflation at 11.82% vs 8.18% (M-o-M)Vegetables inflation at 28.05% vs 16.91% (M-o-M)Pulses inflation at 35.76% vs 26.61% (M-o-M) Cereals inflation at 7.03% vs 6.32% (M-o-M) Fruits inflation at 17.3% vs 5.97% (M-o-M)Egg, meat & fish inflation at 7.49% vs 6.67% M-o-M)Fuel inflation at -1% vs -3.62% (M-o-M) Manufactured products inflation at 1.82% vs 1.17% (M-o-M) More to follow..