WPI inflation falls to a four-month low amid critical state of the rupee

As the inflation on wholesale prices fell to a new low, government data was able to confirm that this reduction owed itself primarily to the recent softening of food prices, especially for vegetables.

By Prarthana Mitra

Amid the ongoing economic doldrums concerning the rupee and fuel costs, the vegetable wholesale market brought a much-needed reprieve and good news for the economy. According to data released on Friday, the wholesale price index-based inflation has registered its lowest in four months, standing at 4.53 per cent.

Food deflation in the time of fuel inflation

As the inflation on wholesale prices fell to a new low, government data was able to confirm that this reduction owed itself primarily to the recent softening of food prices, especially for vegetables.

Food deflation stood at 4.04 per cent in comparison to the figure of 2.16 per cent recorded in July. Deflation in vegetables was a high 20.18 per cent in August when compared to the 14.07 per cent in July.

According to FirstPost, the deflationary trend in food articles offset the double-digit and alarming inflation in ‘fuel and power’ basket which began in August. With global crude oil prices still circling the high $79 per barrel mark and with rupee on a free fall, concerns regarding high petrol and diesel prices continue to worry the finance ministry, central bank and common masses alike.

As the cost of domestic fuel scales new heights every day, paralleled by global crude oil rates, the inflation in this category was as high as 17.73 percent since August.

At such a time, food articles managed to cling on to their deflationary trend. Although potato inflation continued to build, registering 71.89 percent in August, other articles like onion, fruits and pulses witnessed a deflation of 26.8, 16.4 and 14.23 percent respectively.

This news follows in the heels of another batch of data last month, revealing retail inflation to be at a 10-month low of 3.69 percent, coupled with an upward surge in industrial production.


Prarthana Mitra is a staff writer at Qrius

 

 

DeflationIndiaIndian EconomyInflationRupee