New Delhi, Lower food and fuel prices eased India’s annual rate of inflation based on wholesale prices to 4.64 per cent in November from 5.28 per cent in October, official data showed here on Friday.
However, on a year-on-year (YoY) basis, the Wholesale Price Index (WPI) data furnished by the Ministry of Commerce and Industry was higher than the rise of 4.02 per cent reported for the corresponding period of 2017.
“The annual rate of inflation, based on monthly WPI, stood at 4.64 per cent (provisional) for November 2018 (over November 2017) as compared to 5.28 per cent (provisional) for the previous month and 4.02 per cent during the corresponding month of the previous year,” the Ministry said in its review of “Index Numbers of Wholesale Price in India”.
“Build up inflation rate in the financial year so far was 4.73 per cent compared to a build up rate of 2.83 per cent in the corresponding period of the previous year.”
On a sequential basis, the expenses on primary articles, which constitute 22.62 per cent of the WPI’s total weightage, eased to 0.88 per cent, from a rise of 1.79 per cent in October.
Similarly, the prices of food articles declined. The category has a weightage of 15.26 per cent in the WPI index. It deflated by (-) 3.31 per cent from a rise of (-) 1.49 per cent.
In addition, the cost of fuel and power segment, which commands a 13.15 per cent weightage, increased at a slower pace of 16.28 per cent from a growth of 18.44 per cent.
The expenses on manufactured products registered a rise of 4.21 per cent from 4.49 per cent.
On a YoY basis, onion prices deflated by (-) 47.60 per cent, whereas potatoes became dearer by 86.45 per cent.
In contrast, the overall vegetable prices in the month under review declined by (-) 26.98 per cent, against a rise of 59.87 per cent in the same month a year ago.
On Wednesday, another key macro-data showed that India’s November retail inflation rate had fallen to 2.33 per cent from 3.38 per cent in the previous month, while higher manufacturing boosted industrial output growth in October to 8.1 per cent.
On a year-on-year (YoY) basis, the Consumer Price Index (CPI), or retail inflation, fall was even sharper as compared to 4.88 per cent registered in November 2017.
Among the non-food items, the price of high-speed diesel rose by 20.16 per cent on a YoY basis, petrol by 12.06 per cent and LPG by 23.22 per cent.
“Food articles inflation recorded deflation by 3.31 percent which should compel us to analyse whether farmers are receiving reasonable price for their crops despite increase in Minimum Support Price (MSP),” industry body Assocham said.
“Such an analysis will enable the policy makers to take corrective action where required.”
Said ICRA Principal Economist Aditi Nayar: “The easing of the WPI inflation in November 2018 was led by a deeper disinflation in prices of primary food articles, easing of inflation related to crude petroleum and mineral oils following the correction in retail fuel prices, and some impact of the appreciation in the rupee on the landed prices of imports.
“The recent trend of a YoY correction in food prices does not augur well for the strength of rural demand in the immediate term. However, factors such as weak post-monsoon rainfall and a delay in rabi sowing pose some uncertainty regarding how long food prices would remain in the disinflation zone.”
