Sharp spike in food prices bumps WPI inflation to 1.84% in September

Food price inflation surged to 11.53 per cent during the month compared to 3.11 per cent in August, data released by the Ministry of Commerce and Industry on Monday showed

India’s wholesale price index (WPI)-based inflation saw a slight increase in September to 1.84 per cent from 1.31 per cent in August, primarily on the back of a sharp spike in the prices of food items.

Food prices inflation increased to 11.53 per cent during the month as compared to 3.11 per cent during August, data released by the Ministry of Commerce and Industry on Monday showed. As per the data, prices of other major sub-indices like manufactured products witnessed deceleration. Meanwhile, prices of fuel and power contracted further during the month.

The spike in food articles was led by sharp acceleration witnessed in the prices of onion (78.8 per cent), vegetables (48.7 per cent) and potato (78.1 per cent). While the prices of fruits (12.2 per cent), pulses (12.99 per cent), cereals (8.08 per cent) and paddy (8.07 per cent) decelerated during the month, yet they remained high. 

On the other hand, manufactured products which have a weight of 64.2 per cent in the index, saw further decline in inflation to 1 per cent from 1.22 per cent in the preceding month. This was led by a deceleration in the prices of textiles, wood products, chemicals, pharmaceuticals and rubber products among other manufactured goods. 

Manufactured food products, meanwhile saw an acceleration in prices to 5.5 per cent in September.

Factory gate prices of fuel and power (-4.05 per cent) further contracted in September as the prices of high-speed diesel (-5.33 per cent) and petrol (-7.47 per cent) further contracted. Meanwhile, the prices of cooking gas (13.18 per cent) also decelerated slightly. 

This increase in factory gate inflation comes days after an unfavourable base effect and a slowdown in economic activities led to a contraction in the Index of Industrial Production (IIP) (y-o-y) in August for the first time in 22 months. Also last week, the central bank’s monetary policy committee (MPC) also kept the policy rate unchanged.