Negative Core Wholesale Price Index Conveying Lack Of Purchasing Power

The consumer price inflation was up by 3.99% in September 2019 from last year's level of 3.70% and month before level of 3.28%. This is the highest CPI figure since July 2018. The spike, up from the August 19 numbers of 3.28%, is driven by higher food prices. The jump in food and beverages inflation in Rural and Urban areas is primarily driven by jump in vegetable and protein components, noted the State Bank Of India (SBI), in the latest edition of research publication Ecowrap.

Such a jump is seasonal and though headline inflation has ticked up, there is wide expectation that the prices may soften in a couple of months, once the Kharif harvest arrives in the market. Going forward, better supplies on the food front which may ease the pressure on food prices. Meanwhile, WPI core inflation which plunged to negative territory in August 19 has deteriorated further and declined to 38-months low to - 1.07% in September 19. The core WPI will remain in negative zone for next couple of months and this is a bad news for economy as negative core WPI is eventually conveying lack of purchasing power which is a disturbing sign.

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