Crisil Core Inflation Tracker: WPI noses up on costlier food

WPI-based fuel inflation is up at 9.7% average between April-October 2017

Inflation based on the Wholesale Price Index (WPI) rose to 3.6 per cent in October, from 2.6 per cent in September. The pickup was driven by nearly 130-basis point (bp) rise in food inflation, 150 bps in fuel inflation and 20 bps in core inflation. Both food and fuel inflation rose after dipping in September, while for core inflation, this was the second consecutive month of modest pickup.

WPI, which turned positive in July after four months of sustained decline, rose further in August, led by higher food and fuel inflation. 

 

After a blip in September, inflation is once again heading north for two reasons: One is the low-base effect of food inflation withering away and unseasonal rains in October causing vegetables prices to soar. Second, global energy prices have surged for the fourth consecutive month pushing up fuel inflation. 

WPI-based fuel inflation is up at 9.7 per cent average between April-October 2017, compared with an average decline of 

8.8 per cent last fiscal year.