Still in negative, India’s inflation rate firms up (Roundup)

New Delhi, Oct 14 (IANS) India’s annual wholesale inflation for September firmed up slightly at (-) 4.54 percent from (-) 4.95 percent for the previous month, official data released on Wednesday showed.

The annual inflation rate, based on the official wholesale price index (WPI), was ruling at 2.38 percent in September, last year.

The slight firmness was attributed to rising prices of onions, pulses, milk, egg, meat and fish, which have continued to hit household budgets.

On a month-on-month basis, the annual rate of inflation has been in the negative territory since November last year.

The data furnished by the Ministry of Commerce and Industry, revealed a revised rate of the headline inflation for July. The WPI inflation was revised lower to (-) 4.00 percent from (-) 4.05 percent which was reported on August 14, this year.

For the last six months, the revised WPI data has been (-)0.95 percent in January, (-)2.06 percent in February to (-)2.33 percent in March to (-)2.43 percent in April, (-)2.20 percent in May, (-)2.13 percent in June and (-)4.00 percent in July.

The data revealed that among the three major sub-indices of the WPI, the inflation rate for primary articles and manufactured products inched up by 0.4 percent and 0.1 percent, respectively.

The index for fuels and power, meanwhile, slipped by 1.7 percent.

The final rate of inflation for the three sub-indices for last month stood at primary articles (-)2.09 percent, manufactured products (-)1.73 percent and fuel and power (-)17.71 percent.

However, food inflation in the month under review edged up by 0.69 percent from a decline of 1.13 percent recorded in August and 3.68 percent in the corresponding month of last year.

During the month under review, some commodities of mass consumption continued to upset household budgets and notable among them was onion, whose price was higher by as much as 113.70 percent over the like month of the previous year. Pulses were dearer by 38.56 percent.

Other protein-rich food items such as milk, eggs, meat and fish recorded modest price increases. On a year-on-year (YoY) basis, milk was costly by 2.16 percent while eggs, meat and fish prices rose by 2.02 percent.

At the same time potatoes and vegetables were cheaper by 57.34 percent and 9.45 percent, respectively. Even the prices of cereals and rice fell. Cereals depreciated by 1.02 percent and rice were cheaper by 3.64 percent.

The wholesale inflation data comes on the back of retail inflation for September, based on the consumer price index (CPI) which increased to 4.41 percent — from 3.74 percent recorded for the previous month.

Even under the manufactured products category, prices of commodities pertaining to food fell — especially sugar that was lower by 16.30 percent year-on-year.

However, edible oil prices grew by 3.21 percent YoY.

Under fuels — the index for which was down 17.71 percent — petrol was cheaper by 14.78 percent and diesel by 28.06 percent. Cost of cooking gas fell by 5.33 percent.

India Inc welcomed the WPI trend stating that inflationary pressures are largely in control.

“The up-tick seen in the case of select agricultural commodities needs to be dealt with through both short and long term measures. The government is fully geared to the situation and has lined up imports of pulses,” Jyotsna Suri, president, Federation of Indian Chambers of Commerce and Industry (Ficci).

Suri advocated for further cut in the lending rates by the banks.

“As the gains of a lower interest rate regime get transferred to both consumers and investors, demand would pick up and we hope this brings pricing power back into the hands of the producers.”

Other business chamber the Associated Chambers of Commerce and Industry of India (Assocham) President Rana Kapoor raised concerns over the possibility of deflationary conditions setting in the economy.

“This needs to be looked into by the policymakers, especially the adverse impact it might have on profitability of manufacturing sector needs special attention,”

PHD Chamber President Alok B.Shriram elaborated that continuous negative growth of WPI is facilitating the businesses in terms of increased price cost margins vis-à-vis decreased cost of raw materials.

“With the inflation remaining in comfortable trajectory, easy monetary policy stance to expand further in terms of more repo rate cuts as there is a strong need to boost up demand in the economy,” he said.

Shriram added that the dietary habits in India are changing with higher consumption of protein items and perishables which calls for crop diversification.

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