Costlier food items push June WPI inflation to 1.62%

Costlier vegetables, pulses and sugar pushed WPI inflation for the third straight month in June to 1.62 per cent, queering the pitch for the Reserve Bank to reduce rates in its August policy meet.
The wholesale price-based inflation, reflecting the annual rate of price rise, during June was also substantially higher than 0.79 per cent in May and (-)2.13 per cent in June 2015.
Wholesale price index (WPI) inflation in vegetables shot up by 16.91 per cent last month. While, inflation print for cereals stood at 6.32 per cent.
Potato, a daily consumable among Indian households, turned pretty expensive during the month as buyers had to shell out 64.48 per cent more than a year ago.

Among others, the rate of price rise in pulses was at 26.61 per cent, sugar 26.09 per cent and that for fruits the inflation during the month rose by 5.97 per cent.
Overall food inflation was at 8.18 per cent, showed the data released by the Commerce Ministry.

WPI inflation has been firming up for the last three months, after remaining in the negative zone for around one-and-a-half-years.
An elevated wholesale inflation in June follows spike in retail inflation, announced on Tuesday, that hit a 22-month high of 5.77 per cent during the month.
But, onion, minerals, fuel and power, and petrol became pocket friendly as prices declined by 28.60 per cent, 20.75 per cent, 3.62 per cent and 8.74 per cent, respectively.

Among manufactured articles, the wholesale inflation print read at 1.17 per cent in June and that for edible oils it firmed up by 3.42 per cent.
"A jump of 37.4 per cent in cereals inflation between May and June is a cause of worry. Although monsoon is expected to be above normal this year but some delay in its reaching in many parts of country delayed the sowing kharif crop," he said.
The decline in wholesale inflation coincides with a fall in retail inflation, based on Consumer Price Index, which hit a two-year low of 3.63 per cent in November.

ICRA further said that the decline in WPI inflation was milder than expected, with few categories displaying any impact of the note ban on wholesale prices.
"Even at the wholesale level, only perishable food items recorded a significant month-on-month decline in prices in November 2016, whereas prices of wheat and gram hardened. Going forward, we expect most food items to track the seasonal trend of lower prices during the winter months," Nayar said.
As per the data, inflation for manufactured articles was 3.20 per cent compared with 2.67 per cent in the previous month. The corresponding figure for sugar came in at 31.76 per cent and that of petrol 5.54 per cent.

The WPI inflation for September has been revised upwards at 3.8 per cent against the provisional estimate of 3.57 per cent.
The monetary policy committee headed by RBI Governor Urjit Patel had earlier this month held interest rates steady and said demonetisation of high value currency notes could lower prices of perishables and reduce CPI inflation by 10-15 basis points by December.
Even as RBI maintained 5 per cent inflation target for March 2017, it trimmed GDP growth forecast to 7.1 per cent, from 7.6 per cent, for the current fiscal.