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Wholesale Price Inflation at Record Low
Mar 19, 2015

Aided by cheaper food, fuel and manufactured item prices, the Wholesale Prices Index (WPI)-based inflation fell to record -2.06 per cent in February—the fourth straight month when inflation has stayed in the negative zone.

  • This was also the lowest level of wholesale price inflation since it was tracked in 2005 series.

  • It stood at -0.39 per cent in January and 5.03 per cent in February 2014. The steep drop was greater than expectations, but economists, said it wasn’t yet a deflationary trend.

  • The decline in WPI was primarily led by falling fuel and power prices, which carries a weight of 15 per cent in the index.

  • It fell 14.7 per cent on a year-on-year basis. On the other hand, primary articles comprising food, accounting for 20 per cent of WPI, rose 1.43 per cent, while manufactured products (65 per cent weight) was almost flat over last year.

  • WPI, released by the Chief Economic Adviser, Ministry of Industry & Commerce tracks prices of 676 wholesale commodities broadly classified into three primary articles (food, non-food and minerals), fuel & power and manufactured goods (beverages, tobacco, textiles, paper).

  • CPI, published by the Central Statistics Office, Ministry of Statistics and Programme Implementation, tracks weighted averages of 200 consumer goods, plus services.

  • CPI tracks prices of goods purchased daily by general public, while WPI reflects transactions at a wholesale level. In order to represent the actual variation in prices effecting consumers, the Reserve Bank, which used WPI as an inflation measurement indicator, in April, 2014 moved to CPI-based figures.

  • CPI rose to 5.37 per cent in February, up from 5.19 per cent in January, reducing hopes of a rate cut during RBI’s upcoming policy review on April 7. It already reduced policy rates twice since January.


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