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Wholesale Price Index inflation eases to 3.58 per cent in December as veggies price decline

Calculated on the basis of Wholesale Price Index (WPI), the inflation was 3.93 per cent in November 2017 and 2.10 per cent in December 2016.

Published: 15th January 2018 12:22 PM  |   Last Updated: 16th January 2018 08:12 AM   |  A+A-

Image used for representational purpose

By Express News Service

NEW DELHI: Wholesale inflation cooled to a three-month low of 3.58 per cent in December 2017, marginally down from 3.93 per cent registered in November. This is contrary to the retail price index-based inflation, which touched a 17-month high of 5.21 per cent in December, up from 4.88 per cent in the previous month.

While vegetable prices continued to soar 56.46 per cent, food inflation eased to 4.72 per cent in December against 6.06 per cent in November on the back of fall in prices of cereals and potatoes. Overall, prices of primary articles eased to 3.86 per cent in December from 5.28 per cent in November.

Fuel and power inflation rose to 9.16 per cent in December, up from 8.82 per cent in the previous month suggesting that the industry may likely witness a compression in margins.

“The dip in the inflation for primary food articles in the WPI for December 2017 may signal some correction in the CPI inflation for food items in the ongoing month,” said Aditi Nayar, principal economist at ICRA.

Wholesale inflation of manufactured products remained at the same level as before (2.6 percent). The category has a weight of 64.23 per cent in the index.

However, the fact that metals rose by 10.03 per and semi-finished steel went up by 6.19 per cent in December continue to remain a matter of concern for India Inc.

“Lowering of the repo rate in the upcoming monetary policy is critical to boosting investments and building the growth momentum at this juncture,” said Ficci president Rashesh Shah.

“Despite the sharp rise in crude oil prices in the current month, we expect WPI inflation to print in the range of 3.2 per cent to 3.6 per cent in Q4 of FY18, benefiting from the base effect. Therefore, the wedge between the CPI and WPI inflation is expected to remain wide in the ongoing quarter,” said Nayar.

Despite industry demanding a rate cut, experts feel that going forward, CPI inflation will be crucial in assessing the next move of RBI. “Upward pressure on price could ensue in case rabi production falls short, especially for wheat and mustard and the nearly three per cent decline in kharif crop output. In addition, the sustained rise in global commodity prices could further aggravate prices,” said Madan Sabnavis, chief economist, CARE Ratings.



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