India's wholesale inflation remained unchanged in August, showed data released by the Government on Monday. Fine print of the data, however, showed that no increase in prices of manufactured products for the first time in over three years, indicating weak demand.
Inflation measured by the Wholesale Price Index remained unchanged at 1.08 percent in August compared to the preceding month, according to data released by the Ministry of Commerce and Industry. A Bloomberg poll of 21 economists estimated a reading of 1 percent.
Inflation Internals
- Primary articles inflation rose to 6.43 percent in August against 5.03 percent in July.
- Within that basket, prices of food articles rose to 7.67 percent from 6.15 percent in July.
- Non-food articles' inflation stood at 4.76 percent against 4.29 percent in July.
- Fuel and power index contracted by 4 percent against a fall of 3.64 percent in July.
- Manufactured products inflation was zero compared with 0.34 percent in July.
The zero percent inflation seen in manufactured products is the lowest in 38-months, shows comparable data.
Of the 17 items included in the index for manufactured products, nine saw disinflation in August. Manufacture of vegetable and animal oils and fats, basic metals, fabricated metal, chemicals, rubber and plastic products were some of the significant categories to report a drop in prices over last year in August.
The sharp increase in food inflation masked the slide of core items into disinflation, said Aditi Nayar, principal economist at ICRA.
With pricing power of producers unlikely to strengthen and commodities ex-crude oil likely to remain sluggish in the immediate term, the core-WPI inflation may remain sub-zero in the rest of this calendar year.Aditi Nayar, Principal Economist, ICRA.
Apart from the lack of growth in prices of manufactured products, wholesale food prices in August showed an increasing divergence with retail food prices.
While the wholesale prices of food articles rose by 7.8 percent in August, the retail consumer food price index rose by under 3 percent.
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