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LATEST NEWS UPDATES | WPI inflation rises to 3.74% in August despite fall in food inflation -Indivjal Dhasmana

WPI inflation rises to 3.74% in August despite fall in food inflation -Indivjal Dhasmana

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published Published on Sep 14, 2016   modified Modified on Sep 14, 2016
-Business Standard

This was the fifth straight month of WPI inflation after continued deflation for over a year

Unlike deceleration in its consumer price index (CPI) counterpart, the Wholesale price index (WPI)-based inflation rose to 3.74 per cent in August from 3.55 per cent in July. However, even then it remained lower than retail price index-based inflation at 5.05 per cent that had declined from 6.07 per cent in July.

This was the fifth straight month of WPI inflation after continued deflation for over a year.

The opposite trend in the headline numbers was despite the fact that food inflation in both the indices declined. This was because the food index has lower weightage of over 14 per cent in WPI against over 45 per cent in CPI.

This presents contrasting picture for RBI new governor Urjit Patel for any monetary tweaking in October. However, the fact that WPI inflation is still sub-four per cent would give some comforts to the central bank in case it wants to cut the policy rate to  spur dwindling economic growth.

The WPI food inflation fell to 8.23 per cent in the month from 11.82 per cent in July. The CPI-based food inflation declined to 5.91 per cent from 8.35 per cent over this period.

However, inflation in pulses in terms of WPI remained elevated at 34.55 per cent in August despite slight moderation from 35.76 per cent in July. The same was the case with CPI inflation in pulses. There it declined to 22.01 per cent from 27.53 per cent.

While WPI inflation in potatoes rose to 66.72 per cent in August from 58.78 per cent in July, onions turned cheaper at higher rate of 64.19 per cent from 36.29 per cent.

Inflation in manufactured products, constituting almost 65 per cent of the WPI, rose to 2.42 per cent in Augusts from 1.82 per cent in July.

Here processed food products  also saw higher inflation at 11.35 per cent against 10.19 per cent.

Fuel and power saw inflation at 1.62 per cent against deflation at one per cent.

Business Standard, 14 September, 2016, http://www.business-standard.com/article/economy-policy/wpi-inflation-rises-to-3-74-in-august-despite-fall-in-food-inflation-116091400298_1.html


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