India's WPI Inflation comes down to 4.64% - Know how food, fuel and manufacturing products performed

The Central Statistics Office (CSO) on Friday presented India's Wholesale Price Index (WPI) numbers for the month of November 2018. The inflation has come down to 4.64% as compared to 5.28% (provisional) for the previous month and 4.02% during the corresponding month of the previous year. Build up inflation rate in the financial year so far was 4.73% compared to a build up rate of 2.83% in the corresponding period of the previous year.

The CSO data revealed that, the official Wholesale Price Index for ‘All Commodities’ (Base: 2011-12=100) for the month of November, 2018 rose by 0.1% to 121.8 (provisional) from 121.7 (provisional) for the previous month. According to the WPI data for November, the primary articles index which has 22.62% weightage in the index, rose by 0.7% to 137.2 (provisional) from 136.3 (provisional) for the previous month. 

Going ahead, the fuel and power index which has about 13.15% weightage in WPI, declined by 1.0% to 110.0 (provisional) from 111.1 (provisional) for the previous month.

source: tradingeconomics.com

Under fuel & power - index for ‘Mineral Oils’ group declined by 1.8% to 105.5 (provisional) from 107.4 (provisional) for the previous month due to lower price of naphtha (11%), petrol (5%), petroleum coke (3%) and HSD (2%).  However, the price of LPG and ATF (6% each), kerosene (3%), furnace oil (2%) and bitumen (1%) moved up.

As for manufacturing products which has maximum weightage in WPI of 64.23%, surprisingly remained unchanged at its previous month level of 118.

Rate of inflation based on WPI Food Index consisting of ‘Food Articles’ from Primary Articles group and ‘Food Product’ from Manufactured Products group decreased from -0.64% in October, 2018 to -1.96% in November, 2018.

For the month of September 2018, the final WPI for ‘All Commodities' stood at 120.9 as compared to 120.8 (provisional) and annual rate of inflation based on final index stood at 5.22% as compared to 5.13% (provisional) respectively as reported on 15.10.2018.

Although the latest month WPI Inflation has eased down, but yet it was below market expectations. 

Teresa John, Research Analysts at Nirmal Bang predicted WPI inflation likely to soften to 3.82%YoY in November 2018, from 5.3% in the previous month. Apart from a higher base, lower food and fuel inflation will contribute to lower WPI inflation. 

In John's prediction note, WPI food inflation was expected to decline 4.4% YoY in December 2018, after a 2.4% fall in the previous month. Core WPI inflation was expected to soften a tad to 4.92%, from 4.97% earlier. Industrial commodity prices have softened across the board which is likely to keep core inflation in check going forward.