WPI shows that wholesale price inflated up to 1.48 percent in October; highest since February
The wholesale price inflated up to 1.48 percent in October, which marks as highest in the past eight months. The price-based inflation rose as the manufactured products turned costlier.
According to the Wholesale Price Index (WPI), last year’s inflation was at 1.32 percent in September and zero percent in October. In October 2020, inflation was recorded to be the highest ever since February when it was 2.26 percent.
According to data released by the Commerce and Industry Ministry on Monday, prices for manufactured items rose during October. At the same time, the food article prices came down slightly.
According to data, the food inflation in October was recorded at 6.37 percent, as against 8.17 percent in the previous month. The rate of prices of vegetables and potatoes remained high throughout the month. The rate of prices of vegetables and potato was recorded at 25.23 percent and 107.70 percent, respectively, during the month.
Inflation of non-food articles was found to be at 2.85 percent whereas the inflation for minerals was recorded at 9.11 percent in the month of October.
For the case of manufactured products, inflation was at 2.12 percent in October. For the same in September, the inflation was recorded to be at 1.61 percent. Prices in fuel and power basket came down to (-) 10.95 percent in October.
Aditi Nayar, principal economist at ICRA said to the news agency Economic Times, “The WPI inflation recorded a fairly broad-based quickening to a higher-than-expected 1.5% in October. This uptick was primarily driven by a jump in the core inflation to an 18-month high 1.7% in October 2020 from 1% in September.”
According to a report by the same news agency, Nayar said the WPI is expected to remain stable in the next print. He also added that before recording base effect related volatility over the rest of this fiscal while core-inflation will continue to record a steady uptick in month-on-month terms over the next few months, with the strengthening of the economic recovery, while food prices would remain dominated by the trend displayed by vegetables.
According to the data released last week by the consumer price index, retail inflation was at 7.61 percent in October.
The ministry said, “The WPI for October 2020, have been compiled at a weighted response rate of 78 percent, while the final figure for August 2020 is based on the weighted response rate of 91 percent.”
The report from the Reserve Bank of India on the state of the economy last week also flagged unrelenting pressure of inflation as a downside risk confronting the prospects of economic recovery.
The Reserve Bank of India said, “The foremost is the unrelenting pressure of inflation, with no signs of waning in spite of supply management measures…There is a grave risk of generalization of price pressures, unanchoring of inflation expectations feeding into a loss of credibility in policy interventions and the eventual corrosion of the nascent growth impulses that are making their appearance.”