WPI inflation in Nov 2017 jumps to 3.93% due to costly onions

WPI inflation to rise above 4.0 pc in December ICRA expects

WPI inflation in Nov 2017 jumps to 3.93% due to costly onions

An exponential rise in food and fuel prices pushed India's annual rate of inflation based on wholesale prices to 3.93 percent for November, official data showed on Thursday.

Reacting to the rise in inflation, a New Delhi-based industry body said that the continuous increase in the prices of petrol and high-speed diesel due to rise in prices of crude oil globally have to be taken care of by the policymakers since it may have an impact on import bills and the subsequent impact on exchange rates.

The index for "Food Articles" group rose by 1.8% to 150.6 (provisional) from 148 (provisional) for the previous month due to higher price of betel leaves (12%), egg (11%), fruits & vegetables (7%) and fish-marine, beef & buffalo meat, pork, condiments & spices and wheat (1% each). Last month's inflation was the highest since April, when it was 3.85 per cent.

Passenger vehicle sales rose by 14.29 per cent in November mainly due to a low base during the same month past year on account of demonetisation. The government data released today showed that inflation in food articles more than doubled to 4.30 per cent in October.

According to the WPI data, wholesale prices of onion rose a whopping 178.19 per cent in November, against 127.04 per cent in October.

The prices of the two key kitchen vegetables are showing a declining trend in other parts of the country as well.

The RBI has raised its inflation projection to between 4.3 per cent and 4.7 per cent for the six months ending in March 2018.

However, the price of cotton yarn and manufacture of cordage, rope, twine and netting (2 per cent each), and manufacture of knitted and crocheted fabrics (1 per cent) declined.

Similarly, fuel and power prices accelerated by 8.82 per cent.

Overall, we expect the WPI inflation to rise further to above 4.0% in December 2017, before easing to a range of 3.2% to 3.5% in Q4 FY2018, benefiting from the base effect.

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