Wholesale Price Index inflation on a 2 year high of 3.74% in Aug

The decrease in retail inflation and 2.4% contraction of factory output in July has revived hopes for a rate cut by RBI in its next policy meet.

The Dollar Business Bureau

Even as pulses, some manufactured items and even vegetables showed a moderation in prices, the wholesale price index inflation painted a different picture altogether. The wholesale inflation soared to a two-year high of 3.74 per cent in August. While the WPI in July stood at 3.55%, in August it was (-)5.06 per cent. Earlier a high in WPI was recorded at 3.74% in August 2014.

The WPI of vegetables came down to 0.17% in Aug from a high of 28.05% in July.

According to the Ministry of Commerce data inflation of pulses was at a high of 34.55% in August. Potatoes and onions in August saw a price rise of 66.72% and -64.19%.

While the rate of inflation of sugar was at 35.36% and fruits rose by 13.91% in the same month.

Overall, the food inflation basket showed some moderation with inflation at 8.23% in August, against 11.82% in July.

WPI inflation, which was in the negative zone from November 2014 to March 2016, has been firming up for the last five months.

However, a deflationary trend continued in some items like petrol at -8.65% and minerals were at -3.44 per cent.

The inflation for manufactured articles was at 2.42% in August, which was a high from 1.82% in July.

An elevated wholesale inflation in August is in contrast to the retail inflation which eased to a five-month low of 5.05% in the month.

The decrease in retail inflation and 2.4% contraction of factory output in July has revived hopes for a rate cut by RBI in its next policy meet on October 4 to boost growth.

In its monetary policy review last month, the RBI had maintained status quo on key rates citing upside risks to 5 per cent inflation target for March 2017.

The Dollar Business Bureau - Sep 14, 2016 12:00 IST
 
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