According to the Wholesale Price Index (WPI) data released by the Commerce and Industry Ministry, the annual inflation rate was (-)1.07 per cent in January, 2016.
The wholesale inflation for food articles declined by (-)0.56 per cent during the month under review from (-)0.70 per cent in December and 6.46 per cent recorded for January, 2016.
However, expenses on primary articles, which constitute 20.12 per cent of the WPI’s total weight, rose by 1.27 per cent during January.
On a year-on-year (YoY) basis, the annual wholesale inflation rate for onion was lower by (-)28.86 per cent and that for potatoes stood at (-)0.20 per cent. Overall, vegetable prices came down by (-)32.32 per cent.
In contrast, the inflation rate on January-on-January basis for pulses stood at 6.21 per cent, while wheat became expensive by 9.49 per cent and protein-based food items such as eggs, meat and fish became dearer by 3.59 per cent.
Prices of manufactured products, which comprise nearly 65 per cent of the index, continued to rise for the tenth straight month, going up by 3.99 per cent last month.
The prices in this category had risen by 3.67 per cent in December.
The sub-category of manufactured food products, which includes sugar and edible oils, registered a rise of 10.07 per cent.
This was mainly caused by a spurt in sugar prices, which rose by 22.83 per cent as a result of production shortages. Edible oils rose by 6.25 per cent.
Similarly, fuel and power price inflation accelerated in January. It edged up by 18.14 per cent, as compared to a rise of 8.65 per cent reported during the last month of 2016 and (-)9.89 per cent in January.
Segment-wise, price of high-speed diesel rose by 31.10 per cent last month, while that for gasoline or petrol climbed by 15.66 per cent and for LPG by 1.52 per cent.
On Monday, the Central Statistics Office (CSO) reported that India’s annual retail inflation eased to 3.17 per cent in January from 3.41 per cent in December and 5.69 per cent reported during the corresponding period last year.
On its part, India Inc. said that WPI went up due to the firming up of oil prices and select commodities such as basic metal alloys which mirrored global trends.
“Food prices, however, continue to remain benign and this is a positive development. In fact, CPI based inflation data that was released yesterday also indicated softening of the food prices,” Harshavardhan Neotia, President of Ficci, was quoted as saying in a statement.
“We also need to see a further reduction in the lending rates by banks and we hope that RBI’s guidance on this to the banks will be followed up in the form of further reduction in rates for companies.”
Neotia pointed out that while retail loans at an affordable price will help boost consumption, there is an equal need to prop up the industrial sector through easy finance.
Another business body — the Associated Chambers of Commerce and Industry of India (Assocham) stated that the rise in WPI numbers for January 2017 is against the industry’s expectations of falling demand post-demonetisation.
“Though some abatement in the vegetable prices and onion through policy measures is very much appreciated, similarly, policymakers should check and address the continuous rise in prices of products which are of national interest such as wheat since it may have some positive effect on CPI (Consumer Price Index),” said Sandeep Jajodia, President, Assocham.
“The price situation at wholesale level in agriculture sector is still showing stress among farmer community as demonstrated in the index of primary articles which had fallen sharply in November and December, 2016, though some upward movement gained in January, 2017 due to ease in supply of bank notes.”