Wholesale Price Index (WPI)-based inflation for April eased to 3.07 per cent, from 3.62 per cent in the same month last year.

The latest WPI print was also lower than 3.18 per cent recorded in March this year. Build up inflation for the financial year so far was 0.75 per cent, lower than 0.86 per cent in the corresponding period of the previous year.

The overall WPI print for April was dragged down by a sharp decline in manufactured products (which accounts for two-third weightage in the WPI basket), which came in at a 30-month low of 1.7 per cent (2.16 per cent in March 2019).

In addition, owing to a high base effect, the deflation in crude petroleum (under the primary articles) also pulled down the overall WPI.

However, the fall in prices of manufactured products was off set by the rise in food articles to 33-month high of 7.37 per cent and non-food articles at five-month high of 5.23 per cent.

After seeing contractionary patterns in food articles during August 2018 to December 2018, the WPI of food articles has seen a sustained increase in the previous four months.

Experts’ take

Commenting on the latest WPI inflation print, Madan Sabnavis, Chief Economist, CARE Ratings, said: “Going ahead we do expect inflation in primary products to start moving up. Lower inflation for manufactured products is also indicative of sluggish demand conditions in the market. The way the economics of oil develops will largely determine the movement in fuel prices in the coming months.” 

Sabnavis felt that the future course will be driven by oil outlook and food prices. The latter has shown an upward movement and the summer season will also add to the pressure here.

Assocham Deputy Secretary-General Saurabh Sanyal said the benign inflation levels — both CPI and WPI well below the 4 per cent target of the RBI — has made a clear case for rate reduction by the central bank next month.

Related Topics
comment COMMENT NOW