Economy

Wholesale inflation tames to 0.58 per cent

Our Bureau | | Updated on: Dec 16, 2019
image caption

Consumers bore brunt of more expensive onion, potato and vegetables

Wholesale inflation fell to 0.58 per cent in November 2019, down from 4.47 per cent in November 2018. Sequentially, wholesale inflation reported an increase, rising from 0.16 per cent in October 2019, according to a statement by the Ministry of Commerce and Industry.

The blow for consumers was softened by cheaper LPG and Crude Petroleum prices, but they had to shell out much more for expensive onions, potatoes, vegetables and cereals during November 2019.

An official statement said that the Wholesale Price Index (WPI) for all commodities for November 2019 rose by 0.10 per cent to 122.3 from 122.2 for October 2019.

In the overall index, the highest increase was reported in onion prices. The index representing onion inflation rose to 172.30 per cent in November 2019, compared to November 2018. During November 2018, the index had reported a decline of 47.60 per cent compared to onion prices in November 2017.

Since onions represent just 0.16 per cent of the WPI, the spurt could not reflect much in the overall wholesale inflation.

The index of manufactured products, constituting 64.23 per cent of the total weightage in the WPI, reported a decline of 0.84 per cent in November 2019 over November 2018 levels. This means cheaper manufacture of basic metals, and mild steel – semi-finished steel.

“India’s November WPI has surged to a 3-month high of 0.58 per cent from 0.16 per cent in October, mainly on account of higher food prices. However, it remained below the market consensus of 0.74 per cent, this indicates that few sectors including manufacturing are still under stress. Overall, inflation is picking up in the economy, amid slow growth, this can be a sign of worry for the Reserve Bank of India at the February policy,” Rahul Gupta, Head of Research-Currency, Emkay Global Financial Services said.

Estimating WPI inflation to remain under control, CARE Ratings said, “We expect the WPI inflation to be little lower than 1 per cent during the year, mainly on account of a deflationary trend in the manufacturing, fuel and power segment. Going ahead the base effect will fade, which might lead to a tick up in the overall wholesale inflation.”

 

Published on December 16, 2019

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