WPI Inflation Jumps to 4-Month High of 2.36% Amid Higher Food Prices
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India’s wholesale food prices rose 11.6 per cent year on year, compared with a 9.5 per cent gain in September, with vegetable prices soaring 63 per cent on-year, compared to a 48.7 per cent jump in September.
Cereal prices rose 7.9 per cent over last year versus an 8.1 per cent rise a month ago.
India’s wholesale inflation, based on the Wholesale Price Index, accelerated to a four-month high of 2.36 per cent year on year in October due to elevated food prices, government data released on Thursday showed.
The WPI inflation 2.2 per cent in October was higher than 1.84 per cent in September. Food prices rose 11.6 per cent year on year, compared with a 9.5 per cent gain in September, with vegetable prices soaring 63 per cent on-year, compared to a 48.7 per cent jump in September. Cereal prices rose 7.9 per cent over last year versus an 8.1 per cent rise a month ago.
Prices of manufactured products rose 1.5 per cent against a 1 per cent rise in the previous month. Fuel and power prices dropped 5.8 per cent from a 4 per cent fall in September. Headline retail inflation, which is a key gauge for the country’s central bank to decide policy rates, has averaged 5 per cent over the past 12 months, but food inflation has held above 8 per cent, as weather shocks elevated prices of vegetables, cereals and other essential food items.
Sujan Hajra, chief economist and executive director of Anand Rathi Shares and Stock Brokers, said, “WPI inflation surging to 2.36 per cent for the month was driven by the rise in primary products, particularly on account of food articles. The rise was driven by vegetables inflation. Inflation in manufacturing been on rise due to unfavourable base. We expect the manufacturing inflation continuing uptrend, while the better harvest shall ease supply concerns of food items.”
Fuel inflation remaining in negative territory has been a positive factor thus containing the spread of inflation across categories, he added.
In October, retail inflation hit a 14-month high of 6.2% while food prices jumped 10.9%, dashing hopes of an interest cut.
The RBI MPC had softened its policy stance in October to “neutral” but Reserve Bank of India Governor Shaktikanta Das has said the change did not mean there will be a rate cut in the very next meeting.
