Higher food prices jack up India’s September wholesale inflation (Roundup)

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New Delhi, Oct 15 (IANS) India’s inflation rate based on wholesale prices accelerated 5.13 per cent on year in September, from a 4.53 per cent increase in August, as prices of primary articles and food items rose, official data showed here on Monday.

In September last year, the WPI had stood at 3.14 per cent.

“The annual rate of inflation, based on monthly WPI, stood at 5.13 per cent (provisional) for the month of September, 2018 (over September, 2017), as compared to 4.53 per cent (provisional) for the previous month and 3.14 per cent during the corresponding month of the previous year,” the Ministry of Commerce and Industry said.

“Build up inflation rate in the financial year so far was 3.87 per cent compared to a build up rate of 1.50 per cent in the corresponding period of the previous year.”

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On a sequential basis, the expenses on primary articles, which constitute 22.62 per cent of the WPI’s total weightage, rose 2.97 per cent, from a decline of 0.15 per cent in August.

Similarly, the prices of food articles rose. The category has a weightage of 15.26 per cent in the WPI index.

The cost of fuel and power, which commands a 13.15 per cent weightage, increased at a slower pace of 16.65 per cent from a growth of 17.73 per cent.

The expenses on manufactured products registered a rise of 4.22 per cent from 4.43 per cent.

On a year-on-year (YoY) basis, onion prices declined by 7.88 per cent, whereas potatoes became dearer by 68.81 per cent.

In contrast, the overall vegetable prices in September rose by 39.41 per cent, against a rise of 41.05 per cent in the same month a year ago.

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Further, the data revealed that wheat became dearer by 6.09 per cent on a YoY basis while prices of pulses were up 0.74 per cent, though paddy became expensive by 2.03 per cent.

The prices of protein-based food items such as eggs, meat and fish went up marginally by 0.83 per cent.

The price of high-speed diesel rose by 11.88 per cent on a YoY basis, petrol by 10.41 per cent and LPG by 17.04 per cent.

“The WPI inflation for September 2018 revealed a negative surprise, printing 30 basis points higher than our forecast. Moreover, a lagged correction in the sub-index for crude oil is likely to result in the revised print for this month, exceeding the initial 5.1 per cent,” said Aditi Nayar, Principal economist, ICRA.

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“The considerable uptick in the YoY WPI inflation in September 2018 relative to the previous month was driven by primary food and non-food items and minerals, whereas the other major indices recorded a sequential dip, partly driven by the base effect.”

According to Devendra Kumar Pant, Chief Economist and Senior Director (Public Finance), India Ratings and Research, “The prevailing market price for most kharif crops at major mandis has remained lower than the MSP, suggesting procurement hasn’t picked up.”

“The future inflation trajectory would depend on the response of mandi prices with respect of new MSP, and the movement of crude oil price and value of currency.”

–IANS

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