Food prices put upward pressure on WPI in Dec

 India’s wholesale inflation remained in negative territory, but inched up in December due to pressure on prices of pulses and vegetables.

For the 14th month in a row, wholesale prices fell in December but the rate of decline at 0.73 per cent was the slowest in last one year as food prices shot up, indicating return of inflationary pressures ahead of RBI’s monetary policy review. The WPI was (-)1.99 per cent in November.

Prices of pulses shot up 56 per cent in December and that of vegetables rose 20 per cent, while onion prices went up by 26 per cent, respectively. Wholesale inflation has been rising for the fourth month in a row mainly because of shooting food prices.

The wholesale fuel prices, however, dropped 9.15 per cent year-on-year in December, while prices of manufactured goods declined 1.36 per cent, helping to keep the wholesale inflation in the negative territory. Disinflationary pressures in manufacturing products outlined weakness in the commodities sector. The industry warned that continuous decline in WPI numbers for manufactured products could adversely impact the pricing power of manufacturers.

“The continuation of the deflationary trend is an indication of weak demand in the economy, besides being the spillover effect of lower oil and commodity prices. The latest data on industrial production once again highlights the precarious nature of recovery in this sector. We hope that the central bank will respond to the situation appropriately and take steps that would aid the process of industrial recovery. At this juncture, propelling growth and creating jobs should be a priority and all policy levers should be geared towards that objective,” industry body Ficci stated.

Lack in overseas and domestic demand has contracted industrial production in November. The index of industrial production fell the most in over four years by 3.2 per cent on sharp fall in manufacturing output. According to official data, the consumer inflation too has edged up for the fifth straight month in December on rising food prices, signalling a return of price rise in the coming months.