Rising costs of essential food items
India's wholesale-price inflation rises after 17 months. In Picture: An accountant works next to the stacked sacks of garlic at a wholesale vegetable market in Chandigarh, India, January 14, 2016 [Representational Image].Reuters File

After witnessing a record fall for 17 months, India's wholesale price index (WPI)-based inflation registered a spike by 0.34 percent in April 2016. It was in October 2014 that inflation had last grown by 1.66 percent.

The month of March 2016 had seen a fall in inflation rate by 0.85 percent and, on a yearly comparison, April 2015 had seen a negative growth of 2.43 percent. The build-up rate of inflation so far for the year (2016-2017) was 1.37 percent versus 0.17 percent in the corresponding period of the previous year.

The government data released by the Ministry of Commerce and Industry classifies "All Commodities" under the inflation index into three major groups, namely: primary article, fuel and power, and manufactured products, with 20.12 percent, 14.91 percent and 64.97 percent weightage, respectively. Each of the group rose by 2.1 percent, 1.7 percent and 0.8 percent, respectively, over last month, said the data.

"Like Consumer Price Index (CPI) once again the key driver of WPI inflation for the month of April was food inflation," said Sunil Kumar Sinha, Principal Economist, India Ratings and Research Agency, in a note.

Food articles component under the primary group contributed to the rising inflation as it accelerated to 4.23 percent in April from 3.73 percent in March 2016. Pulses, especially, pushed the food price as it rose to 36.36 percent (from 34.45 percent in March 2016), while potatoes rose to 35.45 percent. The food products component under the manufacturing group registered a hike in price by 8.01 percent, with sugar prices increasing by 16.07 percent.

"...a spurt in potato and sugar prices in April 2016 from March/February 2016 shows that aberration in prices of select agricultural commodities due to supply shocks continues to have the potential to destabilise inflation and inflationary expectation in the India context and this makes managing food inflation a much more challenging job than hitherto believed," added Sinha.

Quick Links