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Tuesday, October 14, 2014

WPI inflation eases to 5-year low of 2.38% in September 2014

Core inflation eased to 2.81% in September 2014 from 3.45% in August 2014 

The Wholesale Price Index (WPI)-based inflation dipped to a 59-month low of 2.38% in September 2014 from 3.74% in August 2014. The inflation reading in September 2014 was the lowest since 1.79% in October 2009. Inflation eased for all three major product groups contributing to the overall decline in inflation. Inflation for primary articles dipped 2.18% in September 2014, while inflation for fuel and power group also plunged 1.33% in September 2014 from 4.54% in August 2014. Further, inflation for manufactured products eased to 2.84% in September 2014 from 3.45% in August 2014. 

As per major commodity group-wise inflation, inflation for vegetables, foodgrains, milk, spices, fibres, oilseeds, flowers, fuel products, electricity, sugar, edible oils, textiles items, plastic products, chemical products, ferrous metals, gold and ornaments and motor vehicles etc eased, contributing to the overall decline in inflation in September 2014. On the other hand, inflation for fish inland, poultry chicken, iron ore, cement etc increased in September 2014 from the August 2014 level. 

Inflation for food items (food articles and food products) declined to 3.35% in September 2014 from 4.61% in August 2014. Meanwhile, inflation for non-food items (all commodities excluding food items) also declined to 2% in September 2014 from 3.42% in August 2014. Core inflation (manufactured products excluding foods products) eased to 2.81% in September 2014 from 3.45% in August 2014. 

The contribution of primary articles to the overall inflation declined to 25.6% (at 61 basis points, or bps to 2.38% inflation) in September 2014 from 29.3% (at 110 bps of 3.74%) in August 2014. The contribution of the fuel product group dipped to 9.7% (23 bps) in September 2014 from 20.6% (77 bps) in August 2014, while that of manufactured products increased to 64.7% (155 bps) in September 2014 from 50.2% (189 bps) in August 2014. 

The contribution of food items (food articles and food products) to inflation increased to 41.2% (99 bps to 2.38%) in September 2014 from 36.2% (136 bps) in August 2014, and that of non-food items (all commodities excluding food items) eased to 58.8% (141 bps) in September 2014 compared with 63.9% (240 bps) in August 2014. 

As per revised data available, inflation for July 2014 was revised upwards to 5.41% from 5.19% reported earlier. 

As per the commodity-wise look-up, the contribution to overall inflation declined sharply from tomato by 35 bps, onion 16 bps, petrol 12 bps and naphtha 11 bps in September 2014 from August 2014 level. The share of soyabean, high-speed diesel, furnace oil declined 08 bps each, while that of gold & ornament and raw cotton fell 04 bps each in September 2014. Further, the contribution of betelnut/arecanut, guava, milk, LPG, wheat, aviation turbine fuel, light diesel oil, guar seed, cotton, yarn (unbleached) eased 03 bps, while that of banana, kerosene, maize, copra (coconut), tapioca, cotton shirts, electricity (agricultural), rose, sweet potato 02 bps each in September 2014. 

On the other hand, the contribution of brinjal jumped 18 bps, while it also moved up for potato 06 bps, fish-inland 05 bps, grey cement 04 bps and ground nut seed 04 bps in September 2014. The share of iron ore, rice, fodder and cabbage rose 03 bps each. Further, the contribution of poultry chicken, lemon, cigarette, and powdered milk moved up 02 bps each in September 2014. 

Of the 676 commodities, the inflation rate for about 177 commodities, which carry 21.75% weight in the WPI, rose in September 2014 compared with the August 2014 inflation rate. About 347 commodities holding 65.7% weight in the WPI, witnessed a decline in the inflation rate in September 2014. However, inflation for 152 commodities, carrying 12.6% weight in WPI, remained unchanged in September 2014.
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