Manufactured goods lift WPI inflation to 2.03%

The wholesale price-based inflation rose sharply to 2.03% in January on costlier non-food manufactured items and experts are projecting further uptick in the rate of price rise in the next few months.

The WPI inflation was 1.22% in December, 2020 and 3.52% in January last year. While food articles saw softening in inflation, the sharp rise in the WPI inflation in January was led by manufactured non-food products, fuel and power, and crude petroleum and natural gas, data showed.

Food inflation in January stood at (-) 2.8%, against (-) 1.11% in the previous month. In vegetables and potatoes, it was (-) 20.82% and 22.04% respectively.

Core inflation rose to a 27-month high of 5.1% in January 2021. In non-food articles, inflation was higher at 4.16%, while in the fuel and power basket it was (-) 4.78%, during the month under review.

ICRA Principal Economist Aditi Nayar said a deeper disinflation in primary food articles helped to cushion the impact of the sharp rise in core inflation.

Rising demand and strengthening pricing power will make core inflation rise further to as much as 7-7.5% during April-June quarter, according to ICRA.

"... the headline WPI inflation is set to record large upticks over the course of the next few months. We now expect the WPI inflation to average 5-5.5% in FY2022, unless the available vaccines turn out to be ineffective against new COVID-19 variants, causing commodity prices, consumer confidence and business sentiment to plunge," Nayar added.

NEW DELHI: FMCG major Hindustan Unilever expects its "COVID impacted" product categories, such as ice-cream and vending solutions, to rebound strongly in 2021 with increase in mobility.

In an investor presentation, the company also said categories such as skin care and colour cosmetics, which slowed down last year will also rebound.

"These categories remain structurally attractive for us," HUL said in its presentation.

On the other hand, the company said "COVID obsessive" categories such as hand sanitisers and hand wash which saw a sharp surge during the pandemic are also expected to normalise this year. Hand sanitiser category surged 16 times in 2020 compared to 2019, while the hand wash category grew 1.5 times last year.

Categories such as hand, body and face care, classified as "COVID resistant" items are expected to "to normalise with increase in mobility in 2021", HUL said.

From a peak decline of 73% in the second quarter of the calendar year 2020 during the lockdown these have recovered, with the gradual unlocking that the country went through, to a decline of 51% in the third quarter and 30% in the fourth quarter in line with improving mobility, it added.

Similarly, the company said "COVID impacted" categories, which include ice cream, food solutions business and vending business are also expected "to rebound strongly in 2021 with increase in mobility".

HUL said its "COVID relevant" categories such as dishwash, tea, toothpaste and shampoo are back to pre-COVID levels and expect to sustain in 2021.