India’s inflation mounts to 54 month high

NEW DELHI, July 16: Rise in the prices of manufactured products along with that of food articles and fuel types accelerated India’s wholesale inflation rate to 5.77 per cent compared to 4.43 per cent in the previous month, official data showed on Monday. The Ministry of Commerce and Industry data disclosed that June WPI rate was also higher on year-on-year (YoY) basis. It had risen by 0.90 per cent in June 2017.

“Build up inflation rate in the financial year so far was 2.49 per cent compared to a build up rate of (-) 0.44 per cent in the corresponding period of the previous year,” said the ministry. On a sequential basis, the expenses during the month under consideration on primary articles, which constitute 22.62 per cent of the WPI’s total weightage, rose by 5.30 per cent, from a marginal rise of 3.16 per cent in May 2018. Among primary articles food articles which has a weightage of 15.26 per cent in the index, edged up last month by 1.80 per cent from an acceleration of 1.60 per cent reported for May. The cost of fuel and power, which commands a 13.15 per cent weightage in the index, increased at a fast pace of 16.18 per cent during the month, from a rise of 11.22 per cent in May. Similarly, expenses on manufactured products increased by 4.17 per cent, from 3.73 per cent in the previous month. The overall vegetable prices in June rose by 8.12 per cent, against a fall of (-)21.22 per cent in the same month a year ago.However, protein-based food items such as eggs, meat and fish became marginally cheaper by (-) 0.07 per cent during the month. As per the data on YoY basis, the sub-category of manufactured food products registered a rise of 4.17 per cent.

According to Aditi Nayar, Principal Economist at ICRA: “The lagged transmission of higher crude oil prices, an uptick in cotton prices and electricity tariffs, the hardening of inflation for manufactured products as well as an unfavourable base effect, led to the sharp pickup in the WPI inflation to a 54 month high in June 2018.” The rise in WPI rate comes days after the Central Statistics Office (CSO) revealed that retail inflation in India touched the 5 per cent mark in June, compared to 4.87 per cent in May. (IANS)