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WPI inflation zooms to 9-mth high in November

WPI inflation zooms to 9-mth high in November
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The wholesale price-based inflation rose to a 9-month high of 1.55 per cent in November on costlier manufactured items, even as food prices cooled. The WPI inflation was 1.48 per cent in October 2020 and 0.58 per cent in November last year.

New Delhi: The wholesale price-based inflation rose to a 9-month high of 1.55 per cent in November on costlier manufactured items, even as food prices cooled. The WPI inflation was 1.48 per cent in October 2020 and 0.58 per cent in November last year. This is the highest level of wholesale price index-based (WPI) inflation since February, when it was 2.26 per cent. While food articles saw softening in inflation in November, manufactured items witnessed hardening of prices.

Food inflation in November stood at 3.94 per cent, against 6.37 per cent in the previous month. The rate of price rise in vegetables and potatoes remained high at 12.24 per cent and 115.12 per cent during the month. Inflation in non-food articles was higher at 8.43 per cent in November, while in fuel and power basket it was (-) 9.87 per cent. ICRA Principal Economist Aditi Nayar said with a sharp and fairly broad-based month-on-month increase of 0.8 per cent, the core-WPI inflation rose to a 22-month high of 2.6 per cent in November 2020.

"In our view, a rise in inflation for core items and commodities, including crude oil and mineral oils, would be partly offset by a base-effect led decline in the food inflation in December 2020, resulting in a fairly stable print for the ongoing month," Nayar said. Elior India CEO & MD Sanjay Kumar said the increasing trend in the wholesale price inflation is essentially a mixed bag.

Hopefully the price rise is on the back of increased demand and not because of an increase in input cost for manufacturing. "If it is driven purely by demand, then it is a welcome sign as it signals an improvement in the economy, however one would have to watch with caution whether the Reserve Bank of India (RBI) decides to tighten the monetary policy in view of the rising inflation," Kumar added.

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