WPI inflation rises to 11.39% in Aug on costlier mfg goods

New Delhi, Sep 14 (PTI):
The wholesale price-based inflation rose marginally to 11.39 per cent in August, mainly due to costlier manufactured goods, even as food prices softened.
Snapping the two-month easing trend, WPI inflation rose in August and remained in double-digit for the fifth consecutive month. In July 2021, WPI inflation was 11.16 per cent, while in August 2020 it was 0.41 per cent.
“The high rate of inflation in August 2021 is primarily due to rise in prices of non-food articles, mineral oils; crude petroleum and natural gas; manufactured products like basic metals; food products; textiles; chemicals and chemical products etc as compared the corresponding month of the previous year,” the Commerce and Industry Ministry said in a statement.
Inflation in food articles eased for the fourth straight month, recording (-) 1.29 per cent in August, against zero per cent in July, even as onion and pulses prices spiked.
Inflation in onions was high at 62.78 per cent, while that in pulses was 9.41 per cent. In vegetables it was (-) 13.30 per cent in August. Inflation in crude petroleum and natural gas was 40.03 per cent in August.
In manufactured products, inflation stood at 11.39 per cent in August, against 11.20 per cent in July. The manufactured goods inflation has remained in double digit for the fourth month in a row.
The RBI, which mainly takes into account retail inflation, in its monetary policy last month kept interest rates unchanged at record lows. It projected CPI or retail inflation at 5.7 per cent during 2021-22, up from its earlier projection of 5.1 per cent. Data released showed that retail inflation softened to a four-month low of 5.3 per cent in August, from 5.59 per cent in the previous month, helped by subdued prices of food articles. ICRA Chief Economist Aditi Nayar said the core-WPI inflation has displayed an uninterrupted hardening for 15 consecutive months to a fresh all-time high of 11.1 per cent in August 2021, belying the anticipation that the July 2021 print would prove to be the peak.
“The headline and core-WPI inflation are expected to print in double-digits until October 2021, and then halve by the end of the year. The mild uptick in the August 2021 WPI print does not alter our expectation of a status quo in the upcoming October 2021 MPC review,” Nayar added.
India Ratings and Research Principal Economist Sunil Kumar Sinha said besides the base effect, the wholesale inflation of August 2021, was driven by high inflation in fuel and power at 26.1 per cent and manufactured product inflation at 11.4 per cent.
Within the fuel and power category, LPG, petrol and diesel witnessed inflation of 48.1 per cent, 61.5 per cent and 50.7 per cent respectively.
“Such a high level of fuel inflation besides its first round effect also translates into a second round effect in the economy. In addition to increasing the transportation cost, the fuel prices are a cost to almost all manufacturing sectors either directly or indirectly.
“A higher fuel inflation raises the input costs across all sectors, Sinha said.

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