Wholesale inflation caps six-month high at 3.59pct for Oct

Wholesale inflation caps six-month high at 3.59pct for Oct

According to data from the Ministry of Commerce and Industry, the wholesale price index (WPI), with the revised base year of 2011-12, went up in October to 3.59 percent from 2.60 percent in September.

According to the Consumer Price Index data released on Monday, retail inflation for October rose to a 7-month high of 3.58 per cent on costlier food items, especially vegetables.

Government data showed that inflation in food articles more than doubled to 4.30 per cent in October. "The rise in food inflation is likely to be carried forward to November given the sustained rise in prices of vegetables and fruits".

On the Fuel and Power front, the index rose by 3.1 per cent to 93.5 (provisional) from 90.7 (provisional) for the previous month.

However, inflation in manufactured products saw a slight dip to 2.62 percent, as against 2.72 percent in September.

The final print of August WPI inflation remained unchanged at 3.24 percent.

The contribution of food items (food articles and food products) to inflation moved up to 96 bps to 3.6% in October 2017 compared with 59 bps to 2.6% in September 2017.

In terms of food prices, the YoY (Year-over-year) wholesale inflation rate for onion was higher by 127.04 per cent, whereas for potatoes it plunged by (-) 44.29 per cent. Even, price of pulses continued to be deflated at 31.05 percent.

"The increase was led by firming up of food prices with the vegetables segment remaining a key stress point at this juncture". The primary articles inflation eased to 0.3% in April-October FY2018 from 4.4% in April-October FY2017, while fuel products inflation increased to 9.6% from (-) 9%. However, the price of beedi was up by 4 per cent. However, the price of manufacture of knitted and crocheted fabrics (2 per cent) and synthetic yarn (1 per cent) moved up.

The index for "Manufacture of Textiles" group declined by 0.2 per cent to 113.2 (provisional) from 113.4 (provisional) for the previous month due to lower price of cotton yarn (2 per cent) and woollen yarn (1 per cent).

This was mostly driven by food and fuel prices.

"Ficci would like to reiterate that under the present scenario inflation targeting by the central bank may not be the best approach".