Published: Fri, December 15, 2017
Medicine | By Daryl Nelson

Costlier Onion, Veggies Push Wholesale Inflation To Eight-Month High

Costlier Onion, Veggies Push Wholesale Inflation To Eight-Month High

Inflation based on the wholesale price index (WPI) accelerated to an eight-month high of 3.93% in November, from 3.59% in October, adding to the string of worrisome economic data released this month.

In terms of food prices, the YoY (Year-over-year) wholesale inflation rate for onion was higher by 178.19 percent, whereas for potatoes it plunged by (-) 40.73 percent.

The index for "Manufacture of Wearing Apparel" sub-group rose by 0.3 per cent to 137.5 in November 2017 from 137.1 for the previous month due to higher price of manufacture of knitted and crocheted apparel (1 per cent).

"While vegetable prices may ease on a month-on-month basis going forward, primary food inflation on a year-on-year basis is nevertheless expected to rise further in the next two months, on account of the base effect related to the drop in vegetable prices from December 2016-February 2017", Nayar said.

Build up inflation rate in the financial year so far was 2.74 per cent compared to a build up rate of 3.90 per cent in the corresponding period of the previous year, as per data released by the Ministry of Commerce and Industry.

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The RBI has raised its inflation projection to between 4.3 per cent and 4.7 per cent for the six months ending in March 2018. Petrol prices grew 10.57 percent in November from 17.91 percent a month ago, with liquefied petroleum gas (LPG) prices witnessing 31.30 percent jump from almost 18.17 percent rise in October.

Meanwhile, industrial production growth hit a three-month low of 2.2 per cent in October, mainly due to subdued performance of manufacturing and mining sectors.

In its Monetary Policy statement on December 6, the RBI had marginally raised its inflation forecast for the second half of the fiscal and analysts expect wholesale prices to be on the rise as well.

In October a year ago, it was 1.27 per cent. Elevated crude oil prices are likely to impart some firmness to the WPI inflation in the ongoing month.

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