Wholesale price inflation up third month in a row; at 1.48% in October

Economy


New Delhi: India’s wholesale inflation rose for the third consecutive month and firmed up to an eight-month high of 1.48% in October driven by manufactured items, data released by the commerce and industry ministry showed on Monday.

Wholesale price index (WPI) inflation was 1.32% in September.

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. The government also revised the wholesale inflation for August to 0.41% from 0.16% earlier.

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“The WPI inflation recorded a fairly broad-based quickening to a higher-than-expected 1.5% in October. This uptick was primarily driven by a jump in the core inflation to an 18-month high 1.7% in October 2020 from 1% in September,” said Aditi Nayar, principal economist at ICRA.

Food inflation cooled to 6.37% in October from 8.17% in September. Inflation in vegetables and potato was 25.23 % and 107.70 %, respectively, in October.

In the manufactured products category, inflation was at 2.12% compared to 1.61% in September. Fuel and power witnessed a 10.95% deflation in October.

“The WPI for October 2020, have been compiled at a weighted response rate of 78 percent, while the final figure for August, 2020 is based on the weighted response rate of 91 percent,” the ministry said.

Data released last week showed India’s retail inflation, based on the consumer price index, was a six-year high of 7.61 % in October.

Nayar said the WPI is expected to remain stable in the next print, before recording base effect related volatility over the rest of this fiscal while core-inflation will continue to record a steady uptick in month-on-month terms over the next few months, with the strengthening of the economic recovery, while food prices would remain dominated by the trend displayed by vegetables.



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