Sept WPI eases at 2.38%, food inflation cools to 33-mth low

Inflation data based on Wholesale Price Index (WPI) for September eased to 5-year low at 2.38 percent against 3.74 percent on a month-on-month basis on lower food and fuel prices. Food inflation, which came in at 33-month low, stood at 3.52 percent against 5.15 percent, while the fuel and power group inflation came in at 1.33 percent against 4.54 percent on a month-on-month basis. Manufactured products inflation came in at 2.84 percent against 3.45 percent. The July WPI inflation has been revised to 5.41 percent from 5.19 percent. A CNBC-TV18 poll had estimated WPI to come in at 3.1 percent on a lower primary and fuel inflation. Even the consumer price inflation data for the month of September, which was released yesterday, cooled off to its all-time low of 6.46 percent, the lowest since India started computing consumer price index (CPI) in January 2012, led by lower food prices and fuel costs. Elated by the double cheer brought in by CPI and WPI, Aditi Nayar, Senior Economist at ICRA, said falling crude, coupled with softening in food prices, have helped in bringing down the inflation numbers. Nayar had expected WPI number at around 3-3.1 percent, and says 2.38 percent is definitely positive news. “The good news at this point in time is that we haven’t seen the impact of diesel cuts yet. That would bring some more softening going ahead and something to look forward to. However, we should still remain little bit cautious as far as other food prices are concerned other than the vegetable reversals,” she said. According to Samiran Chakraborty, Head of Research at Standard Chartered Bank, the numbers reflect the decline in global commodity prices as it is WPI that picks up the metal, chemical and fuel price declines faster than CPI. He expects the core inflation to come in lower than 3 percent (better than 3.5 percent seen last month). “So in conjunction with the food price decline which is reflected in both CPI and WPI, the WPI move looks spectacular. Therefore, very good news that on both WPI and CPI we are now getting confirmation that the inflation numbers are low,” he said. Within the monthly WPI data, growth in its respective components (MoM) stood at: Vegetable Index down 13 percent Primary Articles Index down 1.3 percent All Commodities Index down 0.4 percent Manufactured Products Index unchanged Non-food Articles Index down 2 percent Primary Articles Inflation at 2.18 percent against 3.89 percent Fuel & Power Group Index down 0.3 percent Food Articles Index down 1.4 percent