Wholesale inflation spikes to nine-month high of 3.1%; impact of rise in fuel cost, manufactured food products

Wholesale inflation has spiked to 3.1 percent in January from 2.59 percent in the previous month on higher fuel cost and price rise in manufactured products, as per government data released on Friday

FP Staff February 14, 2020 13:36:34 IST
Wholesale inflation spikes to nine-month high of 3.1%; impact of rise in fuel cost, manufactured food products
  • During the month fuel inflation rose to 3.4 percent from a decline of 1.5 percent in December 2019

  • Manufactured food products inflation inched up to 0.34 percent during the month under review from a decline of 0.25 percent in December 2019, according to the data by the Commerce Ministry

  • However, food inflation eased to 11.51 percent from 13.24 percent in December 2019 as vegetable prices cooled down

Wholesale inflation has spiked to 3.1 percent in January from 2.59 percent in the previous month on higher fuel cost and price rise in manufactured food products, as per government data released on Friday. This is the highest inflation figure in nine months. The similar hike in WPI was earlier recorded at 3.24 percent in April 2019.

"The annual rate of inflation, based on monthly WPI, stood at 3.1 percent (provisional) for the month of January, 2020 (over January, 2019) as compared to 2.59 percent (provisional) for the previous month and 2.76 percent during the corresponding month of the previous year," the Ministry of Commerce and Industry said in a statement on January''s Wholesale Price Index (WPI).

"Build-up inflation rate in the financial year so far is 2.50 percent compared to a build-up rate of 2.49 percent in the corresponding period of the previous year", it said.

During the month, fuel inflation rose to 3.4 percent from a decline of 1.5 percent in December 2019.

The inflation in manufactured food products inched up to 0.34 percent during the month under review from a decline of 0.25 percent in December 2019, according to the data by the Commerce Ministry.

However, food inflation eased to 11.51 percent from 13.24 percent in December 2019 as vegetable prices cooled down. Inflation in vegetables slowed down to 52.72 percent in January 2020 from 69.69 percent in December 2019.

Similarly, rise in pulses also softened at 12.81 percent in January 2020 from 13.11 percent in December 2019.

Wholesale inflation spikes to ninemonth high of 31 impact of rise in fuel cost manufactured food products

Representational image. Reuters

Meanwhile, ICRA Principal Economist Aditi Nayar said the WPI inflation could go up further in the coming months mainly because of higher import duties.

"Higher customs duties would push up the inflation related to imports to some extent going forward. However, the impact of the spread of the coronavirus on risk sentiment and commodity prices, including crude oil, is expected to exert a substantial moderation on the wholesale inflation in February 2020," she said.

Nayar attributed the uptick in inflation for manufactured food items to a spike in various edible oils as well as dairy products, which she said is expected to sustain in the coming months.

"Even with a further correction anticipated in vegetable prices in February 2020, the primarily food inflation may persist in double-digits in that month," she added.

Earlier this week, retail inflation based on consumer price index (CPI) soared to a near six-year high of 7.59 percent in January, surpassing the Reserve Bank of India's comfort range primarily on account of rising vegetable and food prices.

This was the highest rate of inflation since May 2014, when it came in at 8.33 percent.

Last week, the RBI Monetary Policy Committee (MPC) in its bi-monthly monetary policy review had kept the key interest rate unchanged at 5.15 percent while maintaining an accommodative stance.

(With PTI inputs)

Updated Date:

also read

Petrol and diesel prices hiked today on 07 October 2021: Fuel rates at record high, check here
India

Petrol and diesel prices hiked today on 07 October 2021: Fuel rates at record high, check here

Petrol and diesel prices: Petrol price in Delhi stands at Rs 103.24 per litre while diesel is available for Rs 91.77. In Mumbai, petrol is retailing at Rs 109.25 while diesel costs Rs 99.55

Petrol and diesel prices hiked today on 10 October 2021: Check rates in your city here
India

Petrol and diesel prices hiked today on 10 October 2021: Check rates in your city here

Petrol and diesel prices: Petrol price in Delhi stands at Rs 104.14 per litre while diesel is available for Rs 92.82. In Mumbai, petrol is retailing at Rs 110.12 while diesel costs Rs 100.66

Reliance signs agreement with Danish company Stiesdal to manufacture Hydrogen Electrolysers
Business

Reliance signs agreement with Danish company Stiesdal to manufacture Hydrogen Electrolysers

The deal will help the Mukesh Ambani-led firm achieve its goal of 1-1-1 for green-hydrogen production (making one kilo of green hydrogen available for $1 inside of one decade)