NEW DELHI: India’s wholesale inflation dipped to a six-month low of 2.8 per cent in January 2018, while showing decline for the second straight month from 3.6 per cent in December 2017, according to the latest data released by the commerce ministry on Thursday. The wholesale price index (WPI)-based inflation was at an eight months high of 3.9 per cent in November 2017.
Despite a dip in inflation rate on primary articles on a monthly basis, prices of majority of food items showed an upward trend on a yearly basis. Food articles registered a year-on-year price growth of 3.0 per cent in January 2018, significantly higher than the year-ago levels of 0.3 per cent. The uptick in prices of vegetables (40.8%), onions (194%) and fruits (8.5%) drove the rise in food prices.
Potato prices rose to 8.68 per cent in January 2018 for the first time after witnessing a negative growth for around a year. The decline in price growth of pulses (-30.4%) and wheat (-6.9%) limited the rise in food inflation. Primary articles, which accounts for more than a fifth of the entire wholesale price index, grew 2.37 per cent in January from 1.93 per cent a year ago and 3.86 per cent in December 2017.
Prices of food items might go up in the coming months. “There could be an upside pressure to inflation in February and March due to possible lower rabi output (due to lower sowing besides rise in global commodity prices viz crude oil prices. This number will, however, have no bearing on RBI stance on inflation and interest rates,” CARE Ratings said in a report. The ratings agency expects wholesale inflation to be 2.5-3 per cent for the remainder of the fiscal with a strong high base effect.
In the fuel and power segment, wholesale inflation eased to 4.08 per cent in January (from 16.7 per cent in January 2017), while it was 2.78 per cent for manufactured items. The rate of increase in petrol prices also declined as it grew at 1.2 per cent in January.
Data released earlier this week showed that retail inflation was at 5.07 per cent. The Reserve Bank of India takes into account retail inflation while deciding on key policy rates. In its recent policy review, the central had kept key interest rate unchanged and estimated retail inflation to be 5.1 per cent in the January-March quarter. For April-September, RBI projected inflation to be in the range of 5.1-5.6 per cent.