WPI inflation stays flat despite high veggie prices

New Delhi: Wholesale price inflation remained flat sequentially at 1.08 per cent in August, but eased on a year-over-year basis, while prices in manufactured products showed no inflation print at 0 per cent as against 0.34 per cent in July, official data showed on Monday.

“The annual rate of inflation, based on monthly WPI for August 2019, remained unchanged at 1.08 compared to July 2019 and 4.62 per cent during the corresponding month of the previous year,” the Ministry of Commerce & Industry said in its review of August numbers based on the Wholesale Price Index.

Many manufactured items witnessed negative inflation, including animal and vegetable oils, leather and apparel products, paper, rubber, chemicals, steel and basic metals.

However, inflation in food articles rose to 7.67 per cent during the month from 6.15 per cent in July, mainly on higher vegetable prices. Vegetable inflation went up at 13.07 per cent month-on-month from 10.67 per cent while protein-rich items like egg, meat and fish rose to 6.60 per cent from 3.16 per cent.

However, fuel and power basket continued to witness deflation at 4 per cent in August as against 3.64 per cent in July.

The decline in core inflation has strengthened the case for a rate cut, however, experts said the core-WPI inflation may remain sub-zero for the rest of this calendar year. “The weakness in the core WPI inflation in August was broad-based, with 15 of the sub-sectors recording a sequential easing in inflation and as many as nine of the categories recording a year-on-year disinflation,” said Aditi Nayar, Economist at Icra.

“The pricing power of producers is unlikely to strengthen and commodities ex-crude oil are likely to remain sluggish in the immediate term. The disinflation in core-WPI in August month has further reinforced our expectation of a rate cut in the October 2019 policy review,” she said.