WPI inflation falls for 15th straight month in January to -0.9%

Continuing its deflationary trend and remaining in deflation zone for 15 months in row, India's main inflation gauge based on monthly wholesale price index (WPI), stood at 0.90% for the month of January 2016 as compared to -0.73% for the previous month and -0.95% during the corresponding month of the previous year, as food articles, mainly vegetables and pulses, turned cheaper. Meanwhile, build up inflation rate in the financial year so far was -0.23% compared to a build up rate of -1.66% in the corresponding period of the previous year. The November data has been revised to -2.04% from -1.99%.

As per government data, the Wholesale Price Index for ‘All Commodities’ (Base: 2004-05=100) for the month of January, 2016 declined by 1.0 percent to 175.7 (provisional) from 177.4 (provisional) for the previous month. WPI inflation has been in the negative zone since November 2014.

Component wise, inflation in primary articles, having weight of 20.12%, declined by 1.7 percent to 253.3 (provisional) from 257.8 (provisional) for the previous month.  In the primary article index, the index for 'Food Articles' group declined by 1.9 percent to 267.6 (provisional) from 272.7 (provisional) for the previous month. The index for 'Minerals' group declined by 6.2 percent to 199.2 (provisional) from 212.3 (provisional) for the previous month .However, the index for ‘Non-Food Articles’ group rose by 0.3 percent to 224.5 (provisional) from 223.9 (provisional) for the previous month. Fuel & Power index having weight of 14.91%, declined by 2.9 percent to 171.6 (provisional) from 176.8 (provisional) for the previous month.

Manufactured Products constituting the major portion of the index with weightage of 64.97% rose by 0.1 percent to 152.7 (provisional) from 152.6 (provisional) for the previous month. Among the manufactured products, the index for 'Food Products' group rose by 0.7 percent to 176.7 (provisional) from 175.4 (provisional) for the previous month. The index for 'Beverages, Tobacco & Tobacco Products' group rose by 0.6 percent to 206.4 (provisional) from 205.2 (provisional) for the previous month. The index for 'Paper & Paper Products' group rose by 0.5 percent to 155.7 (provisional) from 154.9 (provisional) for the previous month. The index for 'Leather & Leather Products' group rose by 0.3 percent to 144.8 (provisional) from 144.4 (provisional) for the previous month. The index for 'Non-Metallic Mineral Products' group rose by 0.6 percent to 178.6 (provisional) from 177.5 (provisional) for the previous month. The index for 'Transport, Equipment & Parts' group rose by 0.1 percent to 138.2 (provisional) from 138.0 (provisional) for the previous month.

On the other side, the index for 'Textiles' group declined by 0.2 percent to 139.4 (provisional) from 139.7 (provisional) for the previous month. The index for 'Wood & Wood Products' group declined by 0.6 percent to 195.3 (provisional) from 196.4 (provisional) for the previous month. The index for 'Rubber & Plastic Products' group declined by 0.4 percent to 145.2 (provisional) from 145.8 (provisional) for the previous month. The index for 'Chemicals & Chemical Products' group declined by 0.1 percent to 149.7 (provisional) from 149.9 (provisional) for the previous month. The index for 'Basic Metals, Alloys & Metal Products' group declined by 0.5 percent to 149.6 (provisional) from 150.3 (provisional) for the previous month.

The final Wholesale Price Index for ‘All Commodities’ (Base: 2004-05=100) stood at 177.5 as compared to 177.6 (provisional) and annual rate of inflation based on final index stood at -2.04 percent as compared to -1.99 percent (provisional) respectively.

The Reserve Bank of India looks into mainly retail inflation data while firming up its monetary policy stance.