WPI inflation rises to 5.77% in June 2018, highest since March 2018
Build up in inflation rate in the financial year so far was 2.49% compared to a build up rate of -0.44% in the corresponding period of the previous year.
The Wholesale Price Index (WPI) inflation for the month of June 2018 rose to 5.77% compared to 4.43% in May 2018 and 3.62% in April 2018. The latest month WPI is also higher compared to just 0.90% in the month of June in previous year. With this, WPI has risen to a 15-month high, as the last time it recorded such trend was witnessed in March 2017. The current month high can be attributed to cost of food, manufactured products, and fuel.
According to CSO data, annual rate of inflation, based on monthly WPI, stood at 5.77% (provisional) for the month of June, 2018 (over June, 2017) as compared to 4.43% (provisional) for the previous month and 0.90% during the corresponding month of the previous year.
Build up inflation rate in the financial year so far was 2.49% compared to a build up rate of -0.44% in the corresponding period of the previous year.
Primary articles index which accounts 22.62% of WPI, rose by 2.0 percent to 133.2 (provisional) from 130.6 (provisional) for the previous month.
Under primary articles, index for ‘Non-Food Articles’ group rose by 2.9 percent to 122.5 (provisional) from 119.1 (provisional) for the previous month due to higher price of raw cotton (11%), industrial wood (8%), safflower (kardi seed) (3%), sunflower, groundnut seed, cotton seed, linseed, mesta and hides (raw) (2% each) and raw rubber, raw wool, castor seed, gingelly seed and coir fibre (1% each).
Furthermore, the index for ‘Minerals’ group rose by 1.4 percent to 140.2 (provisional) from 138.3 (provisional) for the previous month due to higher price of manganese ore (6%), iron ore and zinc concentrate (4% each) and limestone and lead concentrate (2% each). However, the price of garnet (10%), sillimanite (8%) and chromite (5%) declined.
Shockingly, index for ‘Crude Petroleum & Natural Gas’ group rose by 8.1 percent to 95.2 (provisional) from 88.1 (provisional) for the previous month due to higher price of crude petroleum (11%) and natural gas (1%).
Going ahead fuel and power which has a weightage of 13.15% in WPI, surged by 3.0 percent to 104.1 (provisional) from 101.1 (provisional) for the previous month.
Index of manufacturing products which has massive weightage of 64.23% in WPI rose by 0.4 percent to 117.3 (provisional) from 116.8 (provisional) for the previous month.
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 1.12% in May, 2018 to 1.56% in June, 2018.
For the month of April, 2018, the final Wholesale Price Index for ‘All Commodities’ (Base: 2011-12=100) stood at 117.3 as compared to 116.8 (provisional) and annual rate of inflation based on final index stood at 3.62 percent as compared to 3.18 percent (provisional) respectively as reported on 14.05.2018.
The numbers of WPI were in line with the Consumer Price Index (CPI) inflation. The CPI or retail inflation came in at 5% in June 2018 compared to 4.87% in May 2018 and 4.58% in April 2018. Rising inflation is a cause of concern for RBI who is an inflation trajectory central bank. Recently, because of certain factors affecting inflation, the RBI had increased policy repo rate by 25 basis points to 6.25% in June 2018 policy which would be for the first time in Prime Minister Narendra Modi government’s regime so far.