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WPI expansion inflates to 2.59%

Wholesale Price Index (WPI) inflation has accelerated to 2.59 per cent in December from 0.58% in November. This is the highest expansion sum in the last eight periods. WPI inflation had reached 3.1% in April 2019. WPI inflation had reached at 3.46 per cent in December 2018.

According to data released by the Ministry of Commerce and Industry on Tuesday, expansion of food commodities increased to 13.24 per cent from 11 per cent in November.Onions, which saw rates peak in December, witnessed an inflation rate of 455.8 per cent against 172.3 per cent in November. Overall vegetable inflation pinned from 45.32 per cent in November to 69.69 per cent in December. As for non-food articles, prices spiked four-fold to 7.72 per cent from 1.93 per cent in November, prices spiked four-fold to 7.72 per cent from 1.93 per cent in November.

Rahul Gupta, Head of Research-Currency, Emkay Global Financial Services said, “As the beginning of FY20, wholesale based inflation has been in a downtrend. However, in Dec WPI surged to 2.59% from 0.58% in Nov, as onion prices have been jumping since late Sep. The index may rally more if the rise in prices of food ingredients continue the uptrend. WPI along with retail increase (7.35%) may stop RBI-MPC from lowering repo rate in Feb despite subdued germination and maintain an accommodative attitude.”

The consumer price index based retail inflation, as per data released on Monday, spiked to over a 5-year high of 7.35 per cent in December due to costlier food products.

On the other faction Retail inflation reaches 7.35% in December, most crucial since July 2014,

As per the government data, the food increase grew to 14.12 per cent in December as against (-) 2.65 per cent in 2018. It was 10.01 per cent in November 2019.The CPI increase, also known as local inflation, hit a 40-month high of 5.54 per cent in November, from 4.62 per cent in October. It stood at 6.07 per cent in July 2016. Vegetables increase rose to 60.5 per cent in December from 36 per cent in November.

In its December plan study, the RBI had kept policy rates stable for the first time this year, on higher inflation expectations.

The central bank expects food increase to remain high in the next six periods. It has also changed the extension step from 3.5-3.7 per cent in the second half of 2019-20 to 4.7-5.1 per cent.

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