Wholesale inflation inches up to 3.74% in August, beats estimates

India's wholesale inflation, of wholesale price index (WPI), stood at 3.74% in the month of August 2016 as against 3.55% in July 2016 and -5.06% in the corresponding month of last year. 

Rate of inflation in food articles (14.34% weightage on the index) dropped to 8.23%, lowest in past three months. Rate of inflation in food articles stood at 11.82%, 8.57% and 8.24% in July, June and May, respectively. Rate of inflation in pulses, too, came down slightly, at 34.55% in August 2016 from 35.76% in July 2016.

Ministry of Commerce & Industry, in a statement, said, "Build up inflation rate in the financial year so far was 4.45% compared to a build up rate of 0.23% in the corresponding period of the previous year."

Primary articles, that contribute over 20% on the WPI, declined by 0.2% with food articles seeing a drop of 0.6% from the previous month. This was due to lower price of poultry chicken  and urad (6% each), moong (5%), arhar and fruits & vegetables (4% each),  tea (3%), maize and egg (2% each) and masur (1%). "However, the price of gram (8%), mutton (5%), condiments & spices (3%), fish-inland (2 %) and wheat, coffee, fish-marine and barley (1% each) moved up," the ministry said. 

The index of fuel and power declined by 3% due to lower price of  high speed diesel (6%), aviation turbine fuel (5%), petrol and furnace oil (4% each), LPG, kerosene, and bitumen (1% each).

Manufactured products, constituting nearly 65% of the index, rose by 0.2%. It said, "The index for ‘Food Products’ group rose by 1.1% to 191.3 (provisional) from 189.2 (provisional) for the previous month due to higher price of gram powder (besan) (14%), gur (5%), tea leaf (blended) (4%), gingelly oil (3%), oil cakes, sugar and groundnut oil (2% each) and mustard & rapeseed oil, cotton seed oil, copra oil, khandsari, tea dust (unblended), processed prawn, gola (cattle feed) and palm oil (1% each). However, the price of tea leaf (unblended) and sugar confectionary (1% each) declined."

A Bloomberg poll of leading economists in India predicted wholesale inflation at 3.96% for August with a high estimate of 4.65% and a low estimate of 2.6%.