WPI inflation at -3.81%, remains in deflation zone for the 12th straight month

Continuing its deflationary trend and remaining in negative zone for twelfth month in row, India's main inflation gauge, based on monthly wholesale price index (WPI), stood at -3.81% for the month of October, as compared to -4.54% in the previous month and 1.77% during the corresponding month of the previous year. Meanwhile, build up inflation rate in the financial year so far stood at 0.34%, compared to a build up rate of 1.89% in the corresponding period of the previous year.

As per government data, Wholesale Price Index for ‘All Commodities’ (Base: 2004-05=100) for the month of October, 2015 rose by 0.1 percent to 176.7 (provisional) from 176.6 (provisional) for the previous month. The reading which has been in the negative zone since November last year was mainly on the back of higher prices of onions, vegetables and pulses.

The index of Primary Articles having weight of 20.12% in the overall WPI index remained unchanged at its previous month level 252.4 (provisional).  In the primary article index, the index for 'Food Articles' group rose by 0.3 percent to 264.9 (provisional) from 264.0 (provisional) for the previous month. The index for ‘Non-Food Articles’ group rose by 0.2 percent to 220.7 (provisional) from 220.2  (provisional) for the previous month. However, the index for ‘Minerals’ group, declined by 5.0 percent to 222.5 (provisional) from 234.1 (provisional) for the previous month. 

Fuel & Power index having weight of 14.91%, rose by 0.5 percent to 176.4 (provisional) from 175.6 (provisional) for the previous month due to higher price of aviation turbine fuel (7%) and high speed diesel (1%).  However, the price of bitumen (7%), furnace oil (2%) and LPG (1%) declined.

The index of manufactured products which contributes to majority 64.97% of the overall index weight, remained unchanged at its previous month's level of 153.3 (provisional). Among the manufactured products, the index for 'Food Products' group rose by 0.8 percent to 174.3 (provisional) from 173.0 (provisional) for the previous month. The index for 'Paper & Paper Products' group rose by 0.2 percent to 155.2 (provisional) from 154.9 (provisional) for the previous month. The index for 'Wood & Wood Products' group rose by 0.1 percent to 194.4 (provisional) from 194.2 (provisional) for the previous month. The index for 'Non-Metallic Mineral Products' group rose by 0.6 percent to 178.1 (provisional) from 177.0 (provisional) for the previous month.

On the other hand, the index for 'Leather & Leather Products' group declined by 0.1 percent to 145.3 (provisional) from 145.4 (provisional) for the previous month. The index for 'Basic Metals, Alloys & Metal Products' group declined by 0.5 percent to 154.1 (provisional) from 154.9 (provisional) for the previous month. The index for 'Transport, Equipment & Parts' group declined by 0.1 percent to 137.7 (provisional) from 137.8 (provisional) for the previous month. The index for 'Rubber & Plastic Products' group declined by  0.7  percent to 147.0 (provisional) from 148.0 (provisional) for the previous month. The index for 'Textiles' group declined by 0.5 percent to 139.4 (provisional) from 140.1 (provisional) for the previous month.

Meanwhile, for the month of August, 2015, the final Wholesale Price Index for ‘All Commodities’  stood at 176.5 as compared to 176.7 (provisional) and annual rate of inflation based on final index stood at -5.06 percent as compared to -4.95 percent (provisional) respectively.

Pulses and Onion among the food items category turned costlier, also the rate of price rise in case of vegetables stood at 2.56 per cent as against (-)19.37 per cent in the same month last year. Besides pulses and onion, the food items which became dearer during the month were milk and wheat. Reserve Bank of India (RBI) would take into account WPI number for October while deciding on policy rate in its December 1 monetary policy review.