Wholesale Inflation Surges To Four-Month High In October
Wholesale inflation - based on the Wholesale Price Index (WPI) - accelerated to a provisional 5.28 per cent in October from 5.13 per cent in September, and 3.68 per cent in October 2017, government data showed on Wednesday. The wholesale or headline inflation reading of 5.28 per cent marked the highest level recorded in four months. The Central Statistics Office (CSO), under the Ministry Of Commerce & Industry, had last reported a higher inflation at 5.68 per cent in in June this year.
The rate of price increase in manufactured products, which has the maximum weightage (more than 64 per cent) on the Wholesale Price Index, stood at 4.49 per cent in October, the CSO said in its official release. The index for manufactured products comprises items such as food products, beverages, chemicals, metal goods, machinery and electricity.
Wholesale inflation in primary articles, including food articles (cereals, paddy, onions, milk etc.) and petroleum items (crude and natural gas), was at 1.79 per cent in October. The index for primary articles has the second highest weightage of 22.6 per cent on the WPI.
Petrol, diesel and liquefied petroleum gas (LPG) or cooking gas, which form a part of the fuel and power basket, registered a rise of 19.85 per cent, 23.91 per cent and 31.39 per cent respectively. Inflation in the 'fuel and power' basket in October spiked to 18.44 per cent, from 16.65 per cent in September.
(The 5.28 per cent inflation is the highest in four months, and a higher inflation than this level was last seen in June at 5.68 per cent.)
"The uptick in the WPI inflation in October 2018 reflected the impact of the pass through of higher commodity prices and the INR depreciation, whereas the disinflation in food prices had a much smaller impact on wholesale inflation than the CPI (consumer price index), given the difference in weights for food items in the two indices," said Aditi Nayar, Principal Economist, ICRA Ltd.
Wholesale prices of food articles, vegetables, pulses and onion witnessed a deflation of 1.49 per cent, 18.65 per cent, 13.92 per cent, and 31.69 per cent respectively.
Earlier this week, official data showed that retail inflation eased to a 13-month low of 3.31 per cent in October. This was a third straight month in which consumer inflation remained below the central bank's medium-term target of 4 per cent. The Reserve Bank of India takes into account consumer inflation while determining the monetary policy.