India's wholesale price inflation drops to 0% in November

news
15 December 2014

India's wholesale price inflation in November eased to 0 per cent year-on-year, led by a drop in food and fuel prices.

The annual rate of inflation, based on monthly WPI, stood at 0.0 per cent in November 2014 compared to 1.77 per cent in the previous month and 7.52 per cent during the corresponding month of the previous year.

Build-up of inflation rate in the financial year so far was 0.67 per cent compared to 6.70 per cent in the corresponding period of the previous year.
 
However, the slide in wholesale price index is less important than a slide in consumer price inflation as far as the Reserve Bank of India's decision to relax policy rates are concerned.

Although CPI inflation has also been coming down, it is likely to move up again as favourable base effects wear off and the pass through of weaker oil prices is limited due to the fuel tax hike.

CPI or retail inflation eased to a record low of 4.38 per cent from 5.52 per cent in October.

The official wholesale price index for 'all commodities' (Base: 2004-05 = 100) declined by 1.3 per cent in November 2014 compared to the previous month.

The index for the 'primary articles' group, which has a weight of 20.12 per cent in the wholesale price index, declined by 1.0 per cent year-on-year in November 2014.

Among primary articles, the index for the  'food articles' group declined by 0.4 per cent due to lower prices of bajra, tea, ragi, fruits and vegetables, maize and barley, poultry chicken, jowar, rice and gram. However, the price of moong, fish, egg, coffee and mutton and wheat, arhar and condiments and spices moved up.

The index for 'non-food articles'  group declined by 0.7 per cent due to lower price of guar seed and niger seed, sunflower, copra (coconut), cotton seed, raw rubber, safflower (kardi seed), groundnut seed, raw cotton and gingelly seed (sesamum) and flowers and raw wool.  However, the price of raw jute, soyabean and castor seed, fodder and mesta and logs and timber moved up.

The index for the 'minerals' group declined by 5.9 per cent due to lower prices of crude petroleum, sillimanite, barytes and chromite and steatite. However, the price of zinc concentrate, copper ore and iron ore and magnesite moved up.

The index for the 'fuel and power' group declined by 5.4 per cent due to lower price of furnace oil, high speed diesel oil, aviation turbine fuel, petrol and kerosene.

Fuel inflation was (-)4.9 per cent in November reflecting the sharp plunge in global crude prices. Brent prices have dropped over 40 per cent near $60 per barrel since June.

The index for the 'manufactured' group, which has a weight of 64.97 per cent in the WPI,  declined by 0.3 per cent.

Among manufactured products, the index for the 'food products' group declined by 0.9 per cent due to lower price of tea, gur, bakery products, sugar confectionary, soyabean oil, oil cakes, cotton seed oil, processed prawn, wheat flour (atta), gingelly oil, palm oil, cattle feed, sugar, maida and milk powder.

However, the price of sooji (rawa), copra oil and khandsari, mixed spices, mustard and rapeseed oil, vanaspati, ghee, groundnut oil, sunflower oil and canned fish moved up.

The index for the 'beverages, tobacco and tobacco products' group rose 0.1 per cent due to higher prices of zarda, beer, soft drinks and carbonated water.  However, the price of dried tobacco and IMFL-blended declined.

The index for the 'textiles' group declined by 0.3 per cent due to lower prices of  jute sacking bag, cotton yarn, tyre cord fabric and man-made fibre. However, the price of woollen textiles, cotton fabric, jute sacking cloth and man-made fabric moved up.

The index for the 'wood and wood products' group rose 0.1 per cent due to higher price of timber/wooden planks.

The index for the 'paper and paper products' group rose 0.5 per cent due to higher prices of laminated paper, newsprint, corrugated sheet boxes and books/ periodicals/journals. However, the price of paper pulp and maplitho paper declined.

The index for the 'leather and leather products' group rose 1.2 per cent due to higher price of leather and leather footwear.

The index for the 'rubber and plastic products' group declined by 0.1 per cent due to lower price of rubber products. However, the price of rubber tubes moved up.

The index for the 'chemicals and chemical products' group declined by 0.3 per cent due to lower prices of non-cyclic compound, dye and dye intermediates, toilet soap, basic organic chemicals, turpentine oil and rubber chemicals. However, the price of ammonium sulphate, vitamins and vaccines, di-ammonium phosphate, paints, pesticides, washing powder, organic manure and ayurvedic medicines moved up.

The index for the 'non-metallic mineral products' group rose 1.0 per cent due to higher price of lime and marbles and bricks and tiles, grey cement and glass bottles and bottleware. However, the price of white cement declined.

The index for the 'basic metals, alloys and metal products' group declined by 0.5 per cent due to lower price of silver rounds, gold and gold ornaments and billets, sponge iron, wire rods, HRC, CRC and pencil ingots and angles, GP/GC sheets, rebars, joist and beams and pig iron. However, the prices of steel castings, nuts/bolts/screw/washers, iron and steel wire, pipes/tubes/rods/strips, aluminum, ferro silicon, steel pipes and tubes and steel structures moved up.

The index for the 'transport, equipment and parts' group declined by 0.1 per cent due to lower prices of motor cycle, scooter and moped. However, the price of railway brake gear and auto parts moved up.

The final annual rate of inflation remained unchanged at its provisional level of 2.38 per cent as reported earlier as the wholesale price index for 'all commodities' remained unchanged from the provisional figures.





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