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1. WPI Inflation was at 3.85% in April 2017

2. WPI dropped after three consecutive months rise in April

3. CSO revised base year for WPI to 2011-12 from 2004-05

Wholesale inflation or Wholesale Price Index (WPI) are set to be announced on June 14, 2017, and analysts expect it to drop following the higher than expected fall in retail inflation or CPI. 

Get the details here: Wholesale Price Index stands at 2.17% in May; March WPI revised

WPI inflation dropped down to 3.85% after three consecutive months rise. The indicator was at 5.3% by end of March 2017.

tradingeconomics.com 

The Central Statistics Office (CSO) has revised the base year for both all-India Index Index of Industrial Production (IIP) and Wholesale Price Index (WPI) from 2004-05 to 2011-12.

ICRA said, “The revision in the WPI inflation rates would affect the GDP and GVA deflators and may be a precursor to a revision in growth rates for recent years, particularly for those sectors for which nominal earnings or value addition data are deflated using the WPI.”

The IIP numbers under new base rate for April 2017 stood higher than market expectations at 3.1% compared to 2.7% in the month of March 2017 as against a drop of 1.2% in February 2017.

ALSO READ: How much will new IIP, WPI series impact India's GDP?

While the revised WPI series will continue to comprise three major groups namely primary articles, fuel & power and manufactured products, the weight of each these categories has been altered. 

Primary articles has been increased to 22.1%, fuel & power to 13.2% in new base year 2011-12. However, manufactured products are reduced to 64.2% in the revision from previous base year where it stood at 65%.

ICRA said, “The recent decline in commodity prices would keep inflation in check in the immediate term. A likely reversal of the Indian rupee movement in subsequent months as well as prices changes related to introduction of the GST would be crucial for the trend in core inflation.”

It added, “The improved monsoon outlook and the upward revision in advance estimates of crop output would dampen inflation rates although the seasonal rise in price perishables, decline in reservoir levels and revision in minimum support prices would push food prices to some extent."

Thus, ICRA said, “We expect WPI to dip further in May 2017, while continuing to outpace CPI inflation."

The difference between CPI and WPI, which was merely 25 basis points in Nov’16 has increased to 189 basis points in March 2017. Since December 2016, WPI inflation is more than CPI inflation. State Bank fo India said, “We expect this trend to continue till Q4FY18.”

Care Ratings said, “Going ahead, there could be a moderation in inflation in coming months with expectations of normal monsoons. Upside risk to inflation could emerge from movement in the global oil prices. We are expecting the WPI inflation to remain in the range of 3-4% for next couple of months.”

Nomura in its report said, “WPI inflation will rise in the next three months before the inflation rate tapers off," the report said, adding that "we expect WPI inflation to average a much higher 4.4% y-o-y in 2017 versus the 2% average in 2016".

ALSO READ:  WPI Inflation stood at 5.7% in March; Jan WPI revised