Economy

WPI inflation softens to 2.60% in Sept on lower food, vegetable prices

Our Bureau New Delhi | Updated on January 08, 2018 Published on October 16, 2017

LPG, onion, petrol and diesel prices up



Wholesale inflation fell to 2.60 per cent during September 2017, which was 64 basis points lower than 3.24 per cent clocked in August 2017. An official statement said the dip was driven by lower fruits and vegetable prices that fell by 15 per cent during September 2017 compared with August 2017.

However, compared with September 2016, vegetable prices rose by 15.48 per cent, and the price of fruits was up by 2.93 per cent. Onion prices, too, zoomed 79.78 per cent. Inflation was at 1.36 per cent in September 2016.

Compared with August 2017, there was marked increase in the price of fuel and power that rose by 1.7 per cent.

This was driven by a 10 per cent firming up of liquefied petroleum gas or cooking gas and an 8 per cent rise in naphtha. Petrol price rose 3 per cent while jet fuel rose 5 per cent. Furnace oil, kerosene and diesel rose 2 per cent.

But compared with September last year, LPG prices were higher by 20.75 per cent, while petrol prices rose 15.79 per cent and prices of diesel increased by 15.70 per cent.

The index for Manufacture of Motor Vehicles, Trailers and Semi-Trailers fell by 1.3 per cent due to the lower price of passenger vehicles that fell by 7 per cent over August 2017 prices.

Metal prices, too, firmed up with the index for ‘Manufacture of Basic Metals’ group rising by 2.7 per cent over August 2017. The price of galvanised plain and galvanised corrugated steel sheets rose by 8 per cent, pig iron by 7 per cent, ms pencil ingots, cold rolled coils & sheets, including narrow strip, hot rolled coils & sheets, including narrow strip and other ferro alloys rose by 5 per cent each.

Industry upbeat

Industry, however, was upbeat in its reaction. In an e-mailed statement, CII Director-General Chandrajit Banerjee, said: “The lower inflation print has benefited from the softening of primary articles, particularly food prices. When taken together with the consumer price index inflation number which has remained unchanged during the month, the data would help boost sentiment.”

FICCI President Pankaj Patel said: “Even the retail inflation numbers released earlier showed some softening in case of food prices. Overall, inflation remains within Reserve Banks’s indicative trajectory and this is an encouraging sign.”

Both Patel and Banerjee called for a repo rate cut.

Banerjee said: “In the recently announced monetary policy review, the opportunity was lost as far moderation of interest rate is concerned, however, given the moderation in both CPI and WPI inflation, the RBI should resume the rate easing cycle in its next monetary policy announcement to give a fillip to demand.”

Patel said: “We feel there is a need for greater balance in our monetary policy approach which is largely focussed on managing inflation. Growth consideration merits equal emphasis and FICCI would urge the central bank to take a more balanced view, especially when the industrial sector needs support to improve on its growth performance that is also vital for generating jobs. We need an accommodative monetary policy at this juncture and hope RBI brings down the policy rate sooner rather than later.”

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Published on October 16, 2017
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