WPI inflation dips to eight month low of 3.8% in December 2018

Core inflation declines to 4.2% in December 2018

The Wholesale Price Index (WPI)-based inflation, base year 2011-12, dipped to eight-months low of 3.8% in December 2018, exhibiting sharp decline for second straight month from 4.6% in November 2018 and 5.5% in October 2018. The inflation declined sharply for fuel and manufactured products group contributing to the dip in overall WPI inflation in December 2018, while the inflation for primary articles rebounded. The core inflation (manufactured products excluding foods products) has declined to 4.2% in December 2018.

The WPI inflation is revised upwards to 5.5% for October 2018 from 5.3% reported earlier.

Inflation of primary articles bounced back to 2.3% in December 2018 from 0.9% in November 2018. The manufactured products inflation dipped to 3.6%, while fuel and power group inflation plunged to 8.4% in December 2018.

As per major commodity group-wise, inflation dipped for mineral oils, crude petroleum & natural gas, basic metals, chemicals and chemical products, fibres, food products, floriculture, motor vehicles, trailers and semi-trailers, fruits, pharmaceuticals, medicinal chemical and botanical products, condiments & spices, oil seeds, milk. On the other hand, inflation of vegetables, eggs, meat & fish, other manufacturing, metallic minerals, pulses, other non-food articles, machinery and equipment, cereals, coal, electricity, fabricated metal products etc moved up in December 2018.

Inflation of food items (food articles and food products) turned positive to 0.1% in December 2018 from (-) 2.0% in November 2018 level. Meanwhile, inflation of non-food items (all commodities excluding food items) declined to 5.3% in December 2018 in 7.4% in November 2018.

The contribution of primary articles to the overall inflation of 3.8% increased to 59 basis points (bps) in December 2018, up from contribution of 23 bps to 4.6% in November 2018. The contribution of fuel product group declined to 91 bps against 174 bps in November 2018, while that of manufactured products eased to 228 bps in December 2018 from 265 bps in November 2018.

The contribution of food items (food articles and food products) to inflation jumped to 2 bps to 3.8% in December 2018 compared with (-) 59 bps to 4.6% in November 2018. Meanwhile, the contribution of non-food items (all commodities excluding food items) declined to 377 bps in December 2018 from 517 bps in November 2018.

The WPI inflation stood at 4.8% in April-December FY2019 against 2.9% in April-December FY2018. The primary articles inflation moved up to 2.4% in April-December FY2019 from 1.4% in April-December FY2018, while fuel products inflation increased to 14.8% from 9.5%. The inflation for manufactured products rose to 4.1% in April-December FY2019 from 2.6% in April-December FY2018.

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