Govt releases truncated April WPI inflation data; reports 10.12% deflation in fuel, power basket

New Delhi: The government on Thursday released truncated data for April wholesale price-based inflation saying there was limited transaction of products in the market due to the outbreak of COVID-19.

As per the data released by the Commerce and Industry Ministry, wholesale price index (WPI) deflation in primary articles was 0.79 percent in April, as against an inflation of 3.72 percent in March.

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The fuel and power basket saw a deflation of 10.12 percent in April, against 1.76 percent deflation in the previous month.

"In view of the limited transactions of products in the wholesale market in April 2020 due to the spread of COVID-19, it has been decided to release the price movement of selected sub-groups/groups of WPI, following the principles of adequacy,” an official statement said.

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All commodities WPI could not be computed for April-2020 due to non- availability of manufactured product group index, it added.

It said the price indices of primary articles have been computed based on mandi prices of agricultural items; ex-mine prices of minerals; prices of crude petroleum and natural gas.

Price indices of fuel and power major group have been computed based on the price data reported from Ministry of Petroleum and Natural Gas, selected public sector undertakings (PSUs), Office of the Coal Controller and Central Electricity Authority.

Price indices of these major groups (primary articles and fuel & power) were released for April 2020 with standard procedures. No changes in estimation procedures were done, it added.

With regard to inflation in manufactured products, the ministry said in view of the preventive measures and announcement of nationwide lockdown by the government to contain spread of COVID-19, the price collection of manufactured products through personal visits of price collectors was suspended with effect from March 19.

Representational image. Reuters.

The data (ex-factory prices) was collected through electronic means of communications from selected factories and institutional sources. The price movement of these sub-groups/groups of WPI was worked out by taking the prices of only those items for which at least 25 percent of price quotations were reported from the selected manufacturing units.

Indices were compiled only for five manufacturing groups - manufacture of food products, beverages, chemicals and chemical products, pharmaceuticals, medicinal chemical and botanical products, and basic metals.

Prices of manufacture of food products (-0.29 percent), pharmaceuticals, medicinal chemical and botanical products (-0.15 percent) and basic metals (-0.84 percent) provisionally declined, whereas prices of chemicals and chemical products (0.86 percent) and beverages (0.24 percent) provisionally increased in April compared to the previous month, it added.

The ministry said food index consisting of ‘food articles'' from primary articles group and ''food products'' from manufactured products group have provisionally increased from 146.1 in March 2020 to 146.6 in April 2020.

The rate of inflation based on WPI Food Index decreased from 5.49 percent in March, 2020 to 3.60 percent in April, 2020.

In March wholesale price inflation eased to a four-month low of an official statement said one percent, from 2.26 percent in February, on sharp fall in prices of food and fuel items as demand slowed.

Earlier this week, the National Statistical Office (NSO) also deferred the release of retail or consumer price index-based inflation for April saying that the nationwide lockdown prevented officials from collecting price data at various centres.

The data collected telephonically showed an increased in prices of commodities like milk products, fruits and vegetables.

The Reserve Bank of India (RBI) takes into account retail inflation while formulating its monetary policy.

The RBI had last month said that its inflation outlook looks benign, with risks around inflation project being balanced. With the softening of food prices, sharp fall in crude prices and normal monsoon, RBI expects inflation for current fiscal to be in the range of 3.6-3.8 percent.

It said the impact of COVID-19 on inflation is ambiguous, with a possible decline in food prices likely to be offset by potential cost-push increases in prices of non-food items due to supply disruptions.

Sriram Iyer, Senior Research Analyst at Reliance Securities, said: "Due to the lockdown to contain the spread of the COVID-19 pandemic the Office of Economic Adviser released only partial Wholesale Price Inflation (WPI) data on Thursday. The release revealed that all Commodities WPI could not be computed for April-2020 due to non-availability of manufactured product group index.

"However, the rate of inflation based on WPI Food Index decreased from 5.49 percent in March 2020 to 3.60% in April 2020. Moreover, Fuel and Power inflation, decreased from -1.76% in March 2020 to -10.12% in April 2020 primarily due to weak demand for crude. These number are provisional and will be revised by the government," he said.