Wholesale Price Index (WPI) food prices down 1.22% in December

The Reserve Bank of India monitors consumer inflation to formulate its monetary policy.

Wholesale inflation in December 2020: Inflation based on the monthly wholesale price index (WPI) was 1.22 percent for the month of December 2020, compared to 2.76 percent in the same month of 2019, government data showed on Thursday, January 14. Wholesale inflation during the month was recorded amid a drop in food prices. Along with this, retail inflation also came down to 4.59 percent in December, which led to reduction in food prices. The release of official data on wholesale inflation – or the rate of increase in wholesale prices – comes at a time when the economy is staring at a slow to medium-term recovery from the COVID-19 crisis amid hopes of coronavier vaccination to bolster the economy.

  1. The WPI food index-based inflation rate fell from 4.27 percent in November 2020 to 0.92 percent in December 2020, according to data released by the Department of Industry and Internal Trade Promotion. Retail inflation based on the Consumer Price Index (CPI) was 6.93 percent in November 2020.

  2. The index for the primary articles group declined to 3.11 percent at 146.5 in December from 151.2 in December 2020. Prices of crude petroleum and natural gas (5.47 percent), minerals (5.36 percent), as well as non-food articles (0.36 percent), increased in December compared to November 2020.

  3. According to government data, the prices of food items declined to 4.85 percent in December 2020. The food inflation in December was 0.92 percent, while the index was 154.4.

  4. “Inflation for manufacturing products, which contributes about 65 percent to the total WPI, increased to 4.24 percent in December 2020, the seventh month of gradual growth.” Rising global commodity prices may also have contributed to this increase, while manufacturing inflation rose 1.4 percent on a month-on-month basis as well, ” Proc. Kripesh Thakkar, HOD – Financial Markets, ITM B-School.

  5. The fall in WPI inflation was aided by the fall in food prices; Manufacturing and fuel prices rose sequentially. Food prices fell across the board, while the sharpest cuts were in vegetable prices. According to a research report by Barclays, the decline in retail prices released earlier this week has softened the prices of food items.

  6. Although inflation of pulses has softened somewhat in December 2020, they are still in the high single or double digits. Due to the arrival of winter vegetables and base effects, in the month of December 2020, high inflation in the category of vegetables has turned into a sudden decline in the last few months’, Dr. Sunil Kumar Sinha, Principal Economist, India Ratings & Research.

  7. The wholesale price index is used by the wholesaler to measure the average change in the price of the sale of goods or services in bulk, and the consumer price index measures the change in price in the sale of goods or services in the retail or price of goods. Or services sold directly to consumers.

  8. The fall in WPI is a good sign but the need to come down is retail inflation. The recent increase in crude oil prices could be a possible drop, ‘Mr. Sanjay Kumar, CEO, and MD, Allier India.

  9. According to Barclays, there will be a slight gradual decline in prices of durable food items such as cereals and pulses. However, the price of cooking oil, other proteins and non-alcoholic beverages is likely to increase slightly. Food inflation is expected to decline sharply to 4.9 percent year-on-year in December from 10.2 percent in November.

  10. ()Read also:Industrial production contracted 1.9% in November 2020) Meanwhile, after registering growth in October 2020, industrial production in the country contracted by 1.9 percent in November 2020, government data showed on January 12. According to the index of industrial production data, manufacturing output declined by 1.7 percent in November and mining output also declined by 7.3 percent. Electricity generation increased by 3.5 percent.

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