An interesting trend has been witnessed in India's two inflation indicators. The CSO today presented the Wholesale Price Index (WPI) inflation data for the September 2018 month, where the indicator has accelerated to 5.13% from 4.53% in previous month. In comparison to previous year same month, the latest number has been higher from 3.814% recorded in September 2017. 

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Build up inflation rate in the financial year so far was 3.87% compared to a build up rate of 1.50% in the corresponding period of the previous year.

The index for primary articles group rose by 0.2% to 135.4 (provisional) from 135.1 (provisional) for the previous month. 

Under this index, the food Articles’ group declined by 0.2% to 144.5 (provisional) from 144.8 (provisional) for the previous month due to lower price of fish-marine (12%), egg and urad (3% each), gram and ragi (2% each) and fruits & vegetables and peas/chawali (1% each). 

Further, the index for ‘Non-Food Articles’ group declined by 0.2% to 124.8 (provisional) from 125.0 (provisional) for the previous month due to lower price of skins (raw) (5%), hides (raw) and industrial wood (4% each), copra (coconut) and soyabean (3% each), mesta and guar seed (2% each) and raw rubber, raw cotton, groundnut seed and coir fibre (1% each).

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Primary articles have a 22.62% weightage in WPI numbers. 

Coming to fuel & power sector which has 13.15% weightage in WPI, the index rose by 2.2% to 107.2 (provisional) from 104.9 (provisional) for the previous month. 

Under the fuel & power index, the ‘Mineral Oils’ group rose by 3.7% to 101.9 (provisional) from 98.3 (provisional) for the previous month due to higher price of lube oils (11%), naphtha (5%), HSD and petrol (4% each), LPG (3%), furnace oil, bitumen and kerosene (2% each) and ATF (1%).  However, the price of petroleum coke (2%) declined.

Manufacturing products which has highest weightage in WPI by about 64.23%, rose by 0.6% to 118.5 (provisional) from 117.8 (provisional) for the previous month.

Here's how manufacturing group performed. 

Index for ‘Manufacture of Food Products’ group rose by 0.3% to 129.4 (provisional) from 129.0 (provisional) for the previous month due to higher price of processing & preserving of fish, crustaceans & molluscs & products thereof (10%), basmati rice (6%), coffee powder with chicory (4%), maida and sooji (rawa ) (3% each), wheat flour (atta) and sunflower oil (2% each) and gur, manufacture of macaroni, noodles, couscous & similar farinaceous products, ice cream, other meats, preserved/processed, manufacture of prepared animal feeds, chicken/duck [dressed-fresh/frozen], rice bran oil, castor oil, manufacture of starches & starch products, rice [non-basmati], wheat bran and groundnut oil (1% each). 

Index for ‘Manufacture of Beverages’ group rose by 0.3% to 120.4 (provisional) from 120.0 (provisional) for the previous month due to higher price of rectified spirit and country liquor (2% each), spirits (1%).  However, the price of bottled mineral water (2%) declined.

Index for ‘Manufacture of Tobacco Products’ group declined by 0.3% to 149.6 (provisional) from 150.1 (provisional) for the previous month due to lower price of other tobacco products (1%).

Index for ‘Manufacture of Textiles’ group rose by 1.1% to 118.9 (provisional) from 117.6 (provisional) for the previous month due to higher price of synthetic yarn and woollen yarn (4% each), texturised & twisted yarn, manufacture of other textiles and manufacture of made-up textile articles, except apparel (2% each) and viscose yarn, manufacture of cordage, rope, twine & netting and cotton yarn (1% each).

Index for ‘Manufacture of Wearing Apparel’ group declined by 0.4% to 138.6 (provisional) from 139.1 (provisional) for the previous month due to lower price of manufacture of knitted & crocheted apparel (1%).

On the other hand, rate of inflation based on WPI Food Index consisting of ‘Food Articles’ from Primary Articles group and ‘Food Product’ from Manufactured Products group increased from -2.25% in August, 2018 to 0.14% in September, 2018.

WPI food index accounts for 24.3% weightage in WPI. 

For the month of July, 2018, the final WPI for ‘All Commodities’ (Base: 2011-12=100) stood at 119.9 as compared to 119.7 (provisional) and annual rate of inflation based on final index stood at 5.27% as compared to 5.09% (provisional) respectively as reported on August 14, 2018. 

The September 2018 month WPI has even surpassed analysts estimates. This is surprising because the CPI Inflation only managed to record growth rate of 3.77% in September, however better than what experts predicted. 

For WPI in September month, Teresa John, economists at Nirmal Bang, expected it to rise to 4.7% YoY in September 2018 from 4.5% in the previous month on account of higher fuel prices. Wholesale prices of vegetables have witnessed a decline, but this is likely to be more than offset by higher fuel prices. 

According to John, core WPI inflation (excluding food and fuel, but including electricity) may, however, moderate from 5.1% in the previous month to 4.1% on a high base. On sequential basis, core WPI inflation is likely to register a marginal increase,