Petrol, diesel take India's wholesale inflation up 3.24% in August 2017

Carts parked outside the shops in Khari Baoli whole sale market near Chandni Chowk, in New Delhi. Photo: IANS

The Wholesale Price Index (WPI) or wholesale inflation for the month of August 2017 rose to 3.24% as compared to 1.88% in July 2017 and 1.1% in the similar period of the previous year.

Most notable causes of this rise in wholesale inflation was fuel and power which constitutes 13.15% of the total weight of the index.

Data show that wholesale inflation in petrol and diesel rose 24.55% and 20.30%, respectively in August 2017 as against the same month of last year.

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source: tradingeconomics.com

Updated series of the WPI comprises a total of 697 items and captures the first point of bulk sale across various markets. The combined index is divided into three major component indices - Primary Articles (food and non-food articles), Fuel and Power and Manufactured Products with weightage of 22.62%, 13.15% and 64.23% respectively.

A Bloomberg poll of economists estimated WPI Inflation at 3.20% for August 2017.

Index for primary articles group were at 1.9% to 134.8 from 132.4 for the previous month.

Index for 'Food Articles' group rose by 2.2% to 150.8 from 147.6 for the previous month due to higher price of betel leaves (9%), fruits & vegetables (8%), ragi (6%), condiments & spices (3%), peas/chawali and fish-marine (2% each) and arhar, beef & buffalo meat, fish-inland, milk and wheat (1% each). However, the price of poultry chicken (10%), urad (5%), coffee and tea (3% each) and jowar, maize, masur, bajra, moong, paddy and egg (1% each) declined.

While index for 'Non-Food Articles' group grew by 1.8% to 120.6 from 118.5 for the previous month due to higher price of floriculture (25%), copra (coconut) (23%), guar seed (8%), safflower (kardi seed) (4%), castor seed (3%), gingelly seed, rape & mustard seed and raw wool (2% each) and soyabean and skins (raw) (1% each). However, the price of raw silk (4%), linseed and groundnut seed (3% each), sunflower, raw jute and raw rubber (2% each) and hides (raw), niger seed, mesta, cotton seed and raw cotton (1% each) declined.

In regards to Fuel & Power group, this index increased to 0.9% to 89.2 from 88.4 for the previous month. The groups and items which showed variations during the month.

The index for ‘Mineral Oils’ group rose by 1.7 percent to 76.6 (provisional) from 75.3 (provisional) for the previous month due to higher price of naphtha (5%), petrol and kerosene (3% each), HSD and ATF (2% each) and furnace oil (1%). However, the price of LPG (5%) and bitumen and petroleum coke (1% each) declined.

Manufacturing index group also rose to 0.2% to 112.9 from 112.7 for the previous month. The groups and items for which the index showed variations during the month

For the month of June, 2017, the final Wholesale Price Index for ‘All Commodities’ (Base: 2011-12=100) and annual rate of inflation remained unchanged at its provisional level of 112.7 and 0.90% respectively.

Analysts expected WPI inflation to remain at elevated levels this month.

Teresa John, Research Analyst, Nirmal Bang said, "WPI inflation is also likely to rise to 2.78% in August 2017 from 1.9% in the previous month. A low base, higher food prices, and a pickup in commodity prices are likely to drive the increase in WPI inflation."