Wholesale prices at 4-month high

Wholesale prices rose to a four-month high in August due to higher food and fuel prices. The wholesale price index (WPI) based inflation rose sharply to 3.24 per cent in August, against 1.88 per cent in July 2017 and 1.09 per cent in August 2016, the data released Thursday showed.

Last week, government data showed retail prices in August too had risen to a five-month high due to high food prices.

WPI data showed onion prices were up 88.46 per cent in August, while vegetables prices rose 44.91 per cent, hitting the common man. Pulses, however, were down by 30.16 per cent compared to August 2016. Overall, food inflation rose 5.75 per cent in August, against 2.15 per cent in July. In fuels, petrol inflation jumped 24.55 per cent and diesel 20.30 per cent in August.

India’s wholesale price inflation (WPI) accelerated to four-month high of 3.24 per cent in August driven by higher prices of food and fuel products.

Onion prices were up by 88.46 per cent in August and vegetables prices shot up by 44.91 per cent hitting the common man.

However, the prices of pulses were down by 30.16 per cent when compared to August last year.

Overall inflation of food articles went up by 5.75 per cent in August, as against 2.15 per cent in July.

Petrol inflation jumped by 24.55 per cent and diesel by 20.30 per cent.

The WPI was at was 1.88 per cent in July 2017 and 1.09 per cent in August 2016. Inflation in manufactured products witnessed a slight increase at 2.45 per cent in August, against 2.18 per cent in July. In fuel and power segment, inflation saw a sharp surge to a near double digit inflation at 9.99 per cent, against 4.37 per cent in July.

“Primary items such as perishables and oilseeds, as well as the pass through of the global price rise in fuels and metals, drove a large part of the uptick in wholesale inflation in August 2017. Nevertheless, the uptick in headline as well as core wholesale inflation in August 2017, strengthens the case for a pause in the upcoming monetary policy review,” said Aditi Nayar, principal economist at Icra.

She said the continued rise in crude oil prices is expected to push up the mineral oils sub-index in the ongoing month.

“However, the subsequent upside risk posed by crude oil and other fuels is likely to be limited,” she added.

Assocham said that while spike in vegetable prices is seasonal in nature, a huge jump in petrol by over 24 per cent and diesel by over 20 per cent is worrisome and would prove to be cascading. “Certainly not a good macro-indicator, especially when the global crude oil prices have not gone up significantly and the prices at the filling stations are going up under a heavy burden of taxation both at the Centre and state level,” it said.