WPI inflation rises to two-month high

Inflation-based on wholesale prices spiked to a two-month high of 5.13 per cent in September, mainly due to hardening of food prices as well as rise in cost of petrol and diesel.

The Wholesale Price Index (WPI) based inflation stood at 4.53 per cent in August and 3.14 per cent in September last year.

According to the government data released on Monday, food articles witnessed hardening of prices with deflation at 0.21 per cent in September as against 4.04 per cent in August.

Deflation in vegetables was 3.83 per cent in September, compared to 20.18 per cent in the previous month, indicating relative rise in prices.

Inflation in 'fuel and power' basket in September was 16.65 per cent.

Individually, in petrol and diesel it was 17.21 per cent and 22.18 per cent, respectively, and for LPG it was 33.51 per cent.

ICRA Principal Economist Aditi Nayar said while crude oil prices have cooled in the recent sessions, and the excise duty and VAT cuts would provide some relief for fuel prices, the weaker rupee would continue to push up the WPI inflation in the current month.

"This remains a crucial risk for the CPI inflation trajectory as well. Moreover, the sharp narrowing in the disinflation for primary food items, led by cereals, fruits, vegetables, condiments and spices, and tea, may be a precursor to a rise in the retail food inflation in the ongoing month," Nayar said.