WPI inflation stands at 1.48% as Wholesale price rises for three consecutive months

Food inflation in October stood at 6.37 per cent, as against 8.17 per cent in September 2020.

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A data released by the Commerce and Industry Ministry on Monday shows a rise in India’s wholesale inflation for the third consecutive month in a row.  The inflation rate stood at 1.48% for October 2020, making it the highest level of Wholesale price index-based (WPI) inflation since February, when it was 2.26%.  The eight-month highest WPI is driven by manufactured items.

Owing to the lockdown situation due to COVID-19, the Wholesale Price index-based inflation which in March was 0.42 per cent, had remained in negatives for the next four months starting from April to July – April (-) 1.57 per cent, May (-) 3.37 per cent, June (-) 1.81 per cent and July (-) 0.25 per cent. The manufactured products turned costlier after the lockdown was evoked by the Government and thus the WPI inflation climbed to 0.16%

Based on WPI Food Index, the inflation rate fell from 6.2 per cent reported for the month of September 2020 to 5.78 per cent in October, whereas if compared to 1.61 per cent in September 2020, WPI manufacturing rose to 2.12 per cent in the month of October 2020.

The data released by the Commerce and Industry Ministry said that the price of the food articles softened in October, whereas the manufactured items witnessed hardening of the prices. “The WPI for October 2020, have been compiled at a weighted response rate of 78 per cent, while the final figure for August 2020 is based on the weighted response rate of 91 per cent” the Ministry added.

The annual rate of inflation based on WPI Food Index, which comprises ‘food articles’ from primary articles group and ‘food product’ from manufactured products group, decreased to 5.78% in October from 6.92% in September.

As compared with September’s Food inflation which was 8.17%, in October it decreased to 6.37% and the inflation remained high in vegetables -25.23% and in potato, it’s 107.70%. With all the inflations in food and manufacturing category, fuel and power witnessed a 10.95% deflation in October.

If compared with last year’s the WPI inflation was 1.32 per cent in September and zero per cent in October 2019. Non-food articles and minerals also saw a higher rate of inflation at 2.85 per cent and 9.11 per cent respectively. Basing on the consumer price index, India’s retail inflation was a six-year high of 7.61% in October – shows a data released the previous week.

“There is a grave risk of generalization of price pressures, un-anchoring of inflation expectations feeding into a loss of credibility in policy interventions and the eventual corrosion of the nascent growth impulses that are making their appearance,” says the Reserve Bank of India flagging the unrelenting pressure of inflation as a downside risk confronting the prospects of economic recovery.  The newly-formed Monetary Policy Committee (MPC) by the Reserve Bank of India’s had decided to keep the key lending repo rate unchanged at 4 per cent in October.

As per the data released, the index for fuel and power has increased by 0.11% to 91.1 in October from 91.0 for September. Prices of electricity increased by 4.26% in October; prices of mineral oils dipped 1.93%, and coal prices remain unchanged. The manufacturing product index increased by 0.42 per cent in October from 119.8 per cent in September.

Although as the wholesale food index rate grew though at a slower pace, the concern for wholesale and retail prices still remains.

 

 

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