Wholesale Price Index (WPI) At Five Month High
Biswajit Yadav / 16 Jun 2014
The country’s wholesale price inflation rose to a five month high at 6.01% and was mainly driven by higher food and fuel costs. With below average rains expected this year and with the looming affect of El Nino, we expect the inflation numbers to rise higher in the coming months.
The annual rate on inflation based on monthly Wholesale Price Index (WPI) for the month of May stood at 6.01%, as compared to 5.20% for the previous month and 4.58% during the corresponding month of the previous year. The inflation for the month of May was at a five month high. The build up to the inflation in the financial year so far was 0.78% as compared to build up rate of 0.76% in the corresponding period of the previous year.
According to the data released today, food inflation in the primary articles which have a total weightage of 20.12% in the WPI basket has increased to 9.5% in May against 8.64% in the month of April 2014. Increase in the rate of inflation in fruits (19.40%), egg, meat & fish (12.47%), oil seeds (4.82%) and minerals (8.84%) led the inflation to increase in the primary articles.
Inflation in fuel & power which has a total weightage of 14.9% in the WPI basket has increased on a monthly basis. It has augmented from 8.93% in the month of April 2014 to 10.53% for the month of May 2014. Price of petrol has continued to increase and it stood at 12.28% in the month of May as against 7.77% in the month of April 2014. The liquefied petroleum gas prices have moderated, while the high speed diesel prices have increased in the same period.
The inflation of manufactured products which has a total weightage of around 65% has amplified from 3.15% in the month of April 2014 to 3.55% for the month of May 2014. Inflation in wood and paper products has increased to 7.48% and 6.47% against 5.69% and 4.42% respectively for the month of May as compared to the previous month. While the inflation in the iron & semis have also increased to 4.08% against 2.32% during April 2014.
Although CPI has shown some signs of moderation in the month of May, the core inflation and WPI has remained at elevated levels, not showing any signs of moderation. The core inflation has risen to 3.8% from 3.4% in the previous month. Therefore, we can say that, as the WPI and core inflation is increasing and as the looming effect of Hailstorm and El Nino is yet to be seen, we don’t see any rate cuts by the RBI in the coming days.
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