WPI inflation dips to 58-months low in August 2014

Crore inflation eases to 3.45% in August 2014 from 3.58% in July 2014

The Wholesale Price Index (WPI) based inflation dipped to 58-months low of 3.74% in August 2014 from 5.19% in July 2014. The inflation reading in August 2014 was lowest since 1.79% posted in October 2009. The inflation eased for all three major product groups contributing to the overall decline in inflation. The inflation for primary articles nearly halved to 3.89% in August 2014, while the inflation for fuel and power group also dipped 4.54% in August 2014 from 7.4% in July 2014. Further, the inflation for manufactured products declined to 3.45% in August 2014 from 3.67% in July 2014.

As per the major commodity group wise inflation, the inflation for fruits, vegetables, fish-inland, raw cotton, crude petroleum, mineral oils, electricity, tea, edible oils, cotton yarn, plastic products, and gold and gold ornaments etc eased contributing to the overall decline in inflation in August 2014. On the other hand, the inflation for milk, spices, oilseeds, flowers, sugar, grey cement, PVC insulated cables etc increased in August 2014 from July 2014 level.

Inflation for food items (food articles and food products) declined to 4.61% in August 2014 from 7.01% in July 2014. Meanwhile, inflation for non-food items (all commodities excluding food items) also declined to 3.42% in August 2014 from 4.42% in July 2014. The core inflation (manufactured products excluding foods products) eased to 3.45% in August 2014 from 3.58% in July 2014.

The contribution of the primary articles to the overall inflation declined to 29.3% (at 110 basis points or bps to 3.74% inflation) in August 2014 from 36.2% (at 187 bps of 5.19%) in July 2014. The contribution of the fuel product group dipped to 20.6% (77 bps) in August 2014 from 24.4% (126 bps) in July 2014, while that of manufactured products increased to 50.2% (189 bps) in August 2014 from 39.4% (204 bps) in July 2014.

The contribution of food items (food articles and food products) to inflation declined to 36.3% (136 bps to 3.74%) in August 2014 from 39.4% (203 bps) in July 2014, so that of non-food items (all commodities excluding food items) increased to 63.9% (240 bps) in August 2014 compared to 60.9% (314 bps) in July 2014.

As per the revised data available, inflation for June 2014 has been revised upwards to 5.66% from 5.43% reported earlier.

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