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WPI rises to 4-month high of 5.28% in October, up from 5.13% in Sept

Economists said the monetary policy committee may not change the policy rate in next month's meeting

Indivjal Dhasmana  |  New Delhi 

WPI, Inflation

The wholesale price index (WPI)-based inflation rate rose to a four-month high of 5.28 per cent in October, up from 5.13 per cent in September.

Earlier, data showed that CPI fell to a one-year low of 3.31 per cent in October from 3.7 per cent in the previous month.

With the (RBI) generally tracking CPI inflation, economists said the monetary policy committee may not change the policy rate in next month’s meeting.

“Despite the change in the monetary policy stance to calibrated tightening, the Monetary Policy Committee (MPC) appears likely to maintain a status quo on the repo rate in the December 2018 policy review, following the decline in the October 2018 headline CPI inflation, the deep correction in crude oil prices, and the pullback in the value of rupee,” Aditi Nayar, principal economist at Icra, said.

The difference between the WPI and rates was mainly because of the composition of the two indices. Food items account for more than 45 per cent in CPI, while its weight is just over 14 per cent in WPI.

ALSO READ: WPI inflation drops to 4-month low of 4.53% in August vs 5.09% in July

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The rise in inflation was also caused by increase in inflation in manufactured items. Manufactured items have a weight of 64 per cent in WPI.

"Rise in inflation is driven in parts by costlier fuel but more significantly, by rise in prices of manufactured products as well. Manufactured items have registered a 4.49% price gain YoY and indicate slow and steady growth in underlying demand conditions in the economy," said Rajni Thakur, economist, RBL Bank.

First Published: Wed, November 14 2018. 22:29 IST
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