Dip in food, fuel prices eases January's WPI inflation

5 Dariya News

New Delhi 15-Feb-2018

A dip in food and fuel prices decelerated the rise in India's annual rate of inflation based on wholesale prices to 2.84 per cent in January, official data showed on Thursday.The data on wholesale price index (WPI) furnished by the Ministry of Commerce and Industry showed that the rate of inflation had risen by 3.58 per cent in December 2017 and 4.26 per cent during the corresponding month last year.On a sequential basis, the expenses on primary articles, which constitute 22.62 per cent of the WPI's total weightage, edged higher by 2.37 per cent, from an increase of 3.86 per cent in December 2017.Similarly, the prices of food articles dipped. The category has a weightage of 15.26 per cent in the WPI index. It rose by three per cent from an acceleration of 4.72 per cent reported for December 2017.In addition, the cost on fuel and power category, which commands a 13.15 per cent weightage in the index increased at a slower pace of 4.08 per cent from a growth of 9.16 per cent.However, expenses on manufactured products registered a rise of 2.78 per cent from 2.61 per cent.On a year-on-year (YoY) basis, onion prices soared higher by 193.89 per cent and for potatoes by 8.68 per cent.The overall vegetable prices in January rose by 40.77 per cent, against a fall of (-)23.49 per cent in the same month a year ago.

Further, the data revealed that wheat became cheaper by (-)6.94 per cent on a YoY basis and the prices of pulses came down by (-)30.43 per cent, but paddy became dearer by 4.59 per cent.The protein-based food items such as eggs, meat and fish became marginally expensive by 0.37 per cent during the month.As per the data, the sub-category of manufactured food products registered a rise of 1.92 per cent.Fuel-wise, the price of high-speed diesel rose by 7.07 per cent on a YoY basis, while that of petrol climbed by 1.21 per cent and for LPG by 19.89 per cent.According to Aditi Nayar, Principal Economist at ICRA, WPI inflation for January 2018 "printed considerably lower than expected, led by a sharp dip in the food inflation driven by vegetables, pulses and sugar, and a base effect led moderation in the rate for fuel and power."However, higher commodity prices and a seasonal reset of prices at the beginning of the year, resulted in a considerable uptick in the core inflation," Nayar said."The moderation in the WPI inflation was sharp compared with the mild sequential easing recorded by the CPI inflation in January 2018. Accordingly, the wedge between the two indices may persist in the next few months, despite the prospect of commodity prices remaining high."