Wholesale inflation rises to 3.1%, the highest level since May 2014

WPI inflation at 6-year high
The higher wholesale inflation is fuelled by a steep rise in inflation for food articles in January.

Annual inflation measured in terms of the wholesale price index rose to 3.1% in January from 2.59% in December, recording the highest increase in the last eight months. WPI inflation was 2.76% in January last year, according to the government data released on Friday. The higher inflation is fuelled by a steep rise in inflation for food articles (11.51%) in January, compared with 2.41% in January last year. Inflation of non-food articles also rose to 7.8% in January, compared with 2.32% in the same period last year, according to the data the data released by the ministry of commerce and industry. Inflation for vegetables rose by 52.72% because of a 293% surge in onion prices and 37.34% rise in potato. The wholesale price index for all commodities rose by 0.1% to 122.9 in the previous month.

The wholesale inflation breached the Reserve Bank of India’s comfort level of 6% for the second month running. In view of the rising prices, the RBI kept its policy rates unchanged despite expectations of a cut to address the slowing economic growth.

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Retail inflation had risen to the highest figure since the Narendra Modi-led NDA came to power in 2014 May. Inflation measured in terms of consumer price index stood at 7.59% in January compared with 7.35% in the previous month, powered by higher food items and higher telecom tariffs.

The index for primary articles declined by 1.1% to 147.2 in January from 148.8 in December, while the index for non-food article declined by 1.4% to 132.1 during the same period due to lower prices of fruit & vegetables and tea, arhar, beef and buffalo meat, pork and gram. However, the index for fish (7%), masur and peas/chawali (3% each), urad, egg, wheat, moong, mutton and milk rose marginally.

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The index for minerals declined by 7.2% to 142.6 from 153.6 in December due to lower price of manganese ore, copper concentrate, and iron ore, while the prices of lead concentrate and limestone rose by 1%. The index for crude petroleum and natural gas rose (2.7%) to 88.3. The index for fuel and power rose by 1.4% to 102.7 in January.

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