WPI: India’s Wholesale Inflation Falls To The Lowest Since June 2016
Wholesale inflation in India continued to slide in September led by a fall in manufactured good prices and a decline in fuel inflation.
Inflation as measured by the wholesale price index fell to 0.33 percent in September, according to data released by the Ministry of Commerce and Industry on Monday. This is the lowest since June 2016.
A Bloomberg poll of 24 economists had forecast the wholesale inflation at 0.84 percent.
Wholesale inflation has gradually been sliding lower since September 2018, when it rose to above 5 percent.
Aditi Nayar, principal economist at ICRA, expects the declining trend to continue even though some of the food components of the index may remain elevated.
We expect the wholesale food inflation to remain elevated in the immediate term. Nevertheless, unless pricing pressures re-emerge in core WPI items, the likelihood of which appears bleak at present, the headline WPI may slip into disinflation in the ongoing month.Aditi Nayar, Principal Economist, ICRA.
Inflation Internals
A break-up of the inflation data showed a sharp increase in prices of onions, partially offset by a decline in prices of fruits. Minerals and oilseeds continued to exhibit strong price growth on an annual basis.
- Primary articles inflation stood at 5.54 percent in September against 6.43 percent in August.
- Food articles inflation stood at 7.47 percent compared with 7.67 percent in the previous month.
- Non-food articles inflation fell to 2.18 percent against 4.76 percent last month.
- Fuel and power index contracted 7.05 percent over last year against a contraction of 4 percent in August.
Prices of manufactured products, which constitute 64.23 percent of the WPI, contracted for the first time since June 2016, after moderating through the course of the past year.
The index of manufactured products contracted 0.42 percent against a growth of 4.13 percent a year ago. The decline was steepest in manufacturing of basic metals and the mild steel—semi-finished steel segments.
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