New Delhi: An unfavourable base effect, along with higher prices of manufactured products and key transportation fuels, accelerated India’s annual rate of inflation based on wholesale prices to 3.10 per cent in January from a rise of 2.59 per cent in December, official data showed Friday.
Data furnished by the Commerce Ministry showed the wholesale price index (WPI) during January 2020 to be much higher than the rise of 2.76 per cent reported for the corresponding month of the previous year.
“The annual rate of inflation, based on monthly WPI, stood at 3.1 per cent (provisional) for the month of January, 2020 (over January, 2019) as compared to 2.59 per cent (provisional) for the previous month and 2.76 per cent during the corresponding month of the previous year,” the ministry said in a statement.
“Build up inflation rate in the financial year so far is 2.50 per cent compared to a buildup rate of 2.49 per cent in the corresponding period of the previous year,” it said.
On a sequential basis, expenses on the manufactured products category, which constitute over 64 per cent of the WPI’s total weightage, increased to 0.34 per cent from (-)0.25 per cent.
Moreover, prices in the fuel and power sub-category increased at a faster rate of 3.42 per cent from (-)1.46 per cent. The prices of primary and food articles, though at elevated levels, declined marginally.
Consequently, expenses on primary articles, which constitute 22.62 per cent of the WPI’s total weightage, increased to 10.01 per cent during the month under review from a rise of 11.46 per cent in December 2019, while prices of food items increased to 11.51 per cent from a surge of 13.24 per cent.
On a year-on-year (YoY) basis, expenses on primary articles increased to 10.01 per cent from a rise of 3 per cent in December last year. The prices of food items increased YoY at a faster rate of 11.51 per cent from 2.41 per cent.
Onion price increased by a whopping 293.37 per cent, while it was at (-)65.60 per cent during the corresponding period of the last fiscal. Overall, vegetable prices in January 2020 rose 52.72 per cent against the decline of (-)4.08 per cent in the same month a year ago.
The cost of the fuel and power category increased to 3.42 per cent against a rise of 1.85 per cent YoY. However, the cost of the manufactured products category rose at a slower rate of 0.34 per cent against a rise of 2.79 per cent YoY.
“As expected, an unfavourable base effect, in conjunction with a month-on-month rise in the prices of manufactured food and non-food items, fuel and power, and crude oil and natural gas, underpinned the pickup in the YoY WPI inflation to 3.1 per cent in January 2020, despite a modest correction in the food inflation,” ICRA’s Principal Economist Aditi Nayar said.
“Higher customs duties would push up the inflation related to imports to some extent going forward. However, the impact of the spread of the Coronavirus on risk sentiment and commodity prices, including crude oil, is expected to exert a substantial moderation on the wholesale inflation in February 2020.”
The key macroeconomic inflation data comes a day after the Consumer Price Index (CPI) for January showed an accelerating trend.
Data Wednesday showed that higher prices of food items such as vegetables, eggs, meat and fish, along with fuel costs, pushed India’s retail inflation during January to 7.59 per cent from December’s 7.35 per cent.