WPI inflation sees marginal uptick due to rise in prices

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  • Data released by the Department of Industry on Tuesday showed food inflation contracted 1.29 percent in August while fuel inflation and manufacturing inflation rose to 26.09, respectively. % and 11.39% in the same month.

By Asit Ranjan Mishra, Livemint, New Delhi

POSTED ON SEPTEMBER 15, 2021 01:44 AM IST

India’s wholesale price index (WPI) inflation accelerated to 11.39% in August after slowing for two consecutive months as the growth in prices of manufactured items accelerated.

Data released on Monday showed retail price inflation eased in August to a four-month low of 5.3% on lower food prices and a favorable base effect.

Data released by the Department of Industry on Tuesday showed food inflation contracted 1.29 percent in August while fuel inflation and manufacturing inflation rose to 26.09, respectively. % and 11.39% in the same month.

In August, most food products contracted, with the exception of pulses (9.41%) and onions (62.78%). In manufactured products, food products (12.59%), textiles (17%), chemicals (12.11%), base metals (27.51%) were at the origin of the headline inflation, signaling a producer-fueled price recovery as the economy accelerates.

Madan Sabnavis, chief economist at Care Ratings, said satisfactory monsoons, a good Kharif planting season and easing supply-side pressures would ease inflation to some extent in the coming months. “Volatile prices in international crude oil markets and rising prices for edible oils and metal products would lead to higher wholesale inflation given India’s position as a price-taker for most of these. products, ”he added.

Gaura Sen Gupta, economist at IDFC First Bank, said that WPI’s high core inflation of 11.2% means that cost pressures are gradually seeping into the prices of manufactured goods. “This should keep core CPI inflation high despite the presence of excess capacity. Another potential source of upward pressure will be services inflation, which is expected to accelerate in Q4FY22, as consumer spending increases, ”she added.

Data released on Monday showed retail price inflation eased in August to a four-month low of 5.3% on lower food prices and a favorable base effect. which could allow the central bank to keep interest rates low amid an emerging economic recovery. Last month, the Reserve Bank of India raised inflation expectations for this fiscal year to an average of 5.7%.

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