Free Press Journal

India’s wholesale price inflation declines

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New Delhi: India’s wholesale price inflation decelerated by 0.39 percent in January from an increase of 5.11 percent in the corresponding period of last fiscal, with industry pointing to the latest data in calling for a Reserve Bank rate cut.

India’s wholesale price index (WPI) based inflation had fallen to 0.11 percent in December 2014, government data showed. The rate of inflation based on WPI was nil (-0.17 percent) for November from a rise of 1.77 percent in the corresponding period of last fiscal.

The commerce and industry ministry attributed the slowdown in WPI-based inflation to decline in fuel and power prices. Fuel and power inflation declined by 10.69 percent in January as compared to an increase of 9.82 percent in the corresponding period of last year.


The prices of liquefied petroleum gas (LPG) fell by 7.65 percent, petrol became cheaper by 17.08 percent and diesel prices came down by 10.41 percent. Food inflation in the month under review stood at eight percent from 8.85 percent recorded in the corresponding month of 2014.

Prices of major food articles like wheat, onions, egg, fish and meat fell in the month under review. Wheat prices decelerated by 1.63 percent from a rise of 6.79 percent year-on-year, while potatoes accelerated by 2.11 percent in January 2014 from a rise of 16 percent in the corresponding month of 2014.

Onion prices contracted 1.90 percent from an increase of 0.47 percent year-on-year. Egg, fish and meat inflation declined by 1.51 percent from a rise of 12.12 percent in January, 2014.

However, prices of vegetables grew by 19.74 percent in January year-on-year. Cereal prices were up 1.65 percent year-on-year. Rice was costlier by four percent. Manufactured products’ inflation rose to 1.05 percent in the month under review from a rise of 2.96 percent in January, 2014

The deceleration in WPI-based inflation comes on the back of retail inflation gaining momentum. The consumer price index (CPI) based inflation in January stood at 5.11 percent month-on-month. The December retail inflation based on the Consumer Price Index (CPI), recalculated with the new base year, was at 4.28 percent.

The CPI inflation in December was 5 percent with 2010 as the base year. Food inflation in January was 6.13 percent due to costlier fruits, vegetable and cereals. The RBI has set a target for CPI inflation at 8 percent by January 2015 and 6 percent by January 2016.

“Given the continuing trend of moderate inflation both at the wholesale and retail level and the fact that a durable recovery in the industrial sector is still out of sight, we hope that the central bank would continue with the policy rate cut cycle after the forthcoming budget”, said Jyotsna Suri, president of industry chamber FICCI in a statement here.

“We do see an increase in the prices of certain food items such as pulses and vegetables, also reflected in the recently released CPI data. This is largely the result of structural rigidities that have marred the food supply chain and we hope to see the government take further measures to iron out such kinks in the agri-commodities supply chain,” Suri added.

President of PHD Chamber, Alok B. Shriram, commenting on inflation being in negative trajectory, said it will be demand-inducing and a major relief for the manufacturers.

“Since the wholesale price index in India mainly reflects the costs of production of the manufacturers with at around 65 percent weight of the manufactured products in WPI containing mostly basic and intermediate goods, the costs of manufactured goods is expected to decline further,” Shriram said

“Going ahead, lower WPI inflation will impact the production process positively and enhance the domestic demand scenario vis-a-vis low priced availability of goods,” he added.