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WPI-based inflation eases to 2.26% in February on cheaper food items

The data released last week also showed that the consumer price index- (CPI-) based inflation rate declined to 6.58 per cent from 68-month high of 7.59 per cent over this period

Indivjal Dhasmana  |  New Delhi 

Inflation
In vegetables, onion prices rose at the rate of 162.30 per cent in February.

Like its consumer price counterpart, the wholesale price rate fell to a three-month low of 2.26 per cent in February, against 3.1 per cent in the previous month, due to fall in the prices of food items, petrol, and diesel.

The data released last week also showed that the consumer price index- (CPI-) based rate declined to 6.58 per cent from 68-month high of 7.59 per cent over this period.

The wholesale price index- (WPI-) based rate in manufactured items inched up but economists believe it would fall in the coming months due to the impact on demand from coronavirus. Also, if one takes out processed food items, there continued to be deflation in the remaining manufactured articles.

Even though food inflation fell to 7.79 per cent in February from 11.51 per cent in the previous month, vegetables continued to see elevated inflation despite moderation. Inflation in vegetables stood at 60.73 per cent in February, though less than 87.84 per cent in the previous month.

In vegetables, onion prices rose at the rate of 162.30 per cent in February, though less than 293.37 per cent in the previous month. Also, inflation in potatoes was at 60.73 per cent in February, down from 87.84 per cent in the previous month.

Graph

Source: Wholesale Price Index

Among non-food category in primary articles (unprocessed), minerals saw inflation rate coming down to 2.50 per cent in February, from 4.32 per cent in the previous month.

Fuel and power saw inflation coming down slightly to 3.38 per cent in February, from 3.42 per cent in the previous month. Diesel and petrol saw huge dampening effect of softening of global crude prices.

While inflation rate in petrol was just 2.05 per cent in February, against 8.03 per cent in the previous month, diesel saw fall in prices at the rate of 3.06 per cent against inflation of 4.93 per cent over this period.

It was mainly liquefied petroleum gas (LPG) that drove inflation rate in fuel and power category. The rate in LPG jumped to 21.85 per cent from 1.78 per cent over this period.

“The considerable decline in the WPI inflation in February was led primarily by food items, as well as a modest contribution of the correction in prices of crude oil and minerals, which would intensify in the ongoing month,” Aditi Nayar, principal economist at ICRA, said.

Core inflation, which relates to manufactured items sans food products, continued to be in the negative territory. Deflation there stood at 0.8 per cent in February, against 1 per cent in January.

Nayar said the core-WPI recorded a narrower disinflation in February 2020, which was expected to reverse reflecting the growing impact of the coronavirus on prices, demand and sentiment.

She believed that WPI inflation rate would come below 1 per cent in March due to expected decline in the prices of crude oil and various commodities, the pass-through of the same to core-WPI, and a continued correction in prices of some vegetables.

First Published: Mon, March 16 2020. 21:39 IST
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