WPI falls to a 4-month low of 5.43%

India's wholesale price inflation eased marginally, hitting a four-month low of 5.43 per cent in June, helped by slower pace of increases in food and fuel costs, official data released today showed.

The WPI inflation eased as food price inflation fell to 8.14 per cent in June this year as compared to a jump of 10.27 per cent in the same month last year.

The annual rate of inflation based on the wholesale price index (WPI) stood at 5.43 per cent in June 2014 compared to 6.01 per cent in the previous month and 5.16 per cent during the corresponding month of the previous year. Build-up of inflation in the financial year so far was 1.28 per cent compared to a build-up of 1.82 per cent in the corresponding period of the previous year.

The Central Statics Office (CSO), meanwhile, revised the WPI inflation estimate for April to 5.55 per cent from 5.20 per cent earlier.

The new government, which recently imposed curbs on farm exports, can credit itself for the easing of inflation, but there remains a larger risk of a failed monsoon that could drive prices higher and force the central bank to tighten money flows further, again limiting the economy's growth prospects.

RBI, however, has decided to base its interest rate policy on consumer price inflation, in order to make sure consumer inflation follows a "glide path" lower.

An RBI panel has recommended bringing down consumer price index (CPI) inflation to around 8 per cent by the end of January 2015 and to 6 per cent by the end of the following year and further to levels around 2 per cent over the long run.

Narendra Modi, who was elected to power in May, ordered a clampdown on hoarders and curbed exports to rein in rising food prices that threatened the government in the very first month of its assuming office.

The index for the `primary articles' group, which has a weight of 20.12 per cent in the wholesale price index (WPI), rose 1.3 per cent year-on-year in June 2014.

Among primary  articles, the index for the 'food articles' group rose 2.2 per cent due to higher price of fruits and vegetables, coffee, masur arhar, urad, egg, pork, milk, condiments and spices, rice, fish and poultry chicken.  However, the price of tea, ragi, barley and gram, wheat, bajra, jowar and moong declined.

The index for the 'non-food articles' group declined by 1.1 per cent due to lower price of soyabean, gingelly seed and raw silk, tobacco and flowers, copra, linseed and raw cotton. However, the price of fodder and castor seed, cotton seed, niger seed, groundnut seed and sunflower and raw jute, raw rubber and rape and mustard seed moved up.

The index for the 'minerals' group declined by 0.8 per cent due to lower price of barytes, phosphorite, iron ore, crude petroleum and manganese ore. However, the price of sillimanite, magnesite, steatite, copper ore and chromite moved up.

The index for the `fuel and power' group, which has a weight of 14.91 per cent in the WPI, rose 0.1 per cent in June 2014 due to higher price of high speed diesel and lignite. However, the price of aviation turbine fuel and bitumen and kerosene declined.

The index for the `manufacturing products group', which has a weight of 64.97 per cent in the WPI, rose 0.2 per cent.

Among manufacturing products, the index for the 'food products' group rose 0.4 per cent due to higher price of gur, coconut oil, salt, maida and wheat flour, oil cakes and sooji, ghee and rice bran oil. However, the price of gingelly oil and cotton seed oil, vanaspati, groundnut oil, tea leaf (blended), sunflower oil and cattle feed declined.

The index for the 'beverages, tobacco and tobacco products' group declined by 0.1 per cent due to lower price of dried tobacco. However, the price of rectified spirit and beer moved up.

The index for the 'textiles' group rose 0.8 per cent due to higher price of cotton yarn and cotton fabric, gunny and hessian cloth, man-made fabric and woollen textiles. However, the price of tyre cord fabric and jute yarn declined.

The index for the 'wood and wood products' group declined by 0.7 per cent due to lower price of plywood and fibre board. However, the price of processed wood moved up.

The index for the 'paper and paper products' group declined by 0.3 per cent due to lower price of paper for printing / poster and corrugated sheet boxes, paper rolls and printing and writing paper.

The index for the 'leather and leather products' group rose 0.6 per cent due to higher price of leather footwear and leather.

The index for the 'rubber and plastic products' group rose 0.1 per cent due to higher price of plastic/PVC chappals, V-belt, rubber brakes, polyster chips and football and HDPE bag.

However, the prices of expendable polystyrene and HDPE woven fabric and plastic rolls declined.

The index for the 'chemicals and chemical products' group rose 0.3 per cent due to higher price of non-cyclic compound, ammonium sulphate and explosives, antibiotics and pigment and its intermediates, pesticides, basic inorganic chemicals, turpentine oil and antacid and digestive preparations.

However, the price of rubber chemicals, dyes and dye intermediates and basic organic chemicals and synthetic resin, toilet soap declined.

The index for the 'non-metallic mineral products' group declined by 0.5 per cent due to lower price of marbles and polished granite and grey cement. However, the price of bricks and tiles moved up.

The index for the 'basic metals, alloys and metal products' group rose 0.1 per cent to 167.1 from 166.9 in the previous month, due to higher price of steel, ferro manganese and ferro chrome, sheets, joist and beams, iron and steel wire, wire rods, angles, aluminium and steel castings. However, the price of melting scrap and silver and gold and gold ornaments declined.

The index for the 'machinery and machine tools' group rose 0.4 per cent due to higher price of computers, sprinkler, ball/roller bearing, fans and PVC insulated cable, grinding /wet coffee machinery and harvester and fibre optic cable and boiler and accessories. However, the price of insulators and batteries, electric switch gears and electrical pumps declined.