August wholesale inflation unchanged from July, eases YoY

Last Updated: Tue, Sep 17, 2019 15:25 hrs
Retail Inflation

New Delhi: The rise in India's August wholesale price indexed

It eased, however, on a year-on-year (YoY) basis with the August 2018 WPI having risen by 4.62 per cent.

"The annual rate of inflation, based on monthly WPI for August 2019, remained unchanged at 1.08 compared to July 2019 and 4.62 per cent during the corresponding month of the previous year," the Commerce Ministry said in its review of the August WPI numbers.

"Build up inflation rate in the financial year so far was 1.25 per cent compared to a build up rate of 3.27 per cent in the corresponding period of the previous year," it added.

On a sequential basis over July, the expenses on primary articles, which constitute 22.62 per cent of the WPI's total weightage, increased to 6.43 per cent from 5.03 per cent.

The prices of food items increased at a higher rate of 7.67 per cent, from 6.15 per cent.

Instead, the cost of fuel and power, which command 13.15 per cent weightage, deflated further to (-)4 per cent from (-)3.64 per cent.

On a YoY basis, expenses on primary articles, which constitute 22.62 per cent of the WPI's total weightage, increased to 6.43 per cent from a deflation of (-)0.07 per cent in August last year.

On the other hand, prices of food items increased YoY at a faster rate of 7.67 per cent from (-)4.04 per cent.

While price of potatoes declined 21.28 per cent YoY, onions increased 33.01 per cent.

Overall, vegetable prices in August rose 13.07 per cent against the decline of 20 per cent in the same month a year ago.

The cost of the fuel and power category declined 4 per cent against a rise of 17.73 per cent YoY.

"With a sharp increase in food inflation masking the slide of core items into disinflation after a gap of 34 months, the WPI inflation remained unchanged in August 2019 at the previous month's level, and printed slightly higher than expected," said Aditi Nayar, Principal Economist, ICRA.

"The weakness in the core WPI inflation in August 2019 was broad-based, with 15 of the sub-sectors recording a sequential easing in inflation and as many as nine of the categories recording a YoY disinflation. With the pricing power of producers unlikely to strengthen and commodities ex-crude oil likely to remain sluggish in the immediate term, the core-WPI inflation may remain sub-zero in the rest of this calendar year."

The retail inflation figures for August released last Thursday showed a marginal rise to 3.21 per cent, from 3.15 per cent in July. Nonetheless, the Consumer Price Index (CPI) was lower than the corresponding month of last year when retail inflation stood at 3.69 per cent.

Industry observers point out that flooding in certain states have led to a continued rise in the prices of vegetables such as onions. This widened the Consumer Food Price Index (CFPI) to 2.99 per cent last month, from an expansion of 2.36 per cent in July 2019 and 0.29 per cent in August 2018.