Source: The Economic Times, Feb 15, 2017
NEW DELHI: Costlier fuel and an adverse base effect pushed wholesale inflation to a two-and-a-half year high in January, even as price rise in food items remained muted.
Wholesale inflation for January came in at 5.25% compared with 3.39% in December, data released by the commerce and industry ministry on Tuesday showed.Core wholesale inflation, or nonfood, non-fuel inflation, firmed up to a 28-month high of 2.67% in sync with an over 5% reading for core consumer inflation.
Data released on Monday showed consumer inflation fell to a five-year low of 3.17% because of weak food inflation, but it is expected to firm up in the coming months.
Higher global commodity prices led by 18.14% inflation in the fuel and power segment drove Wholesale Price Index (WPI) to its highest level since July 2014. Fuel inflation was 8.65% in December.
“Higher WPI inflation along with benign CPI (consumer price index) inflation is likely to further widen the wedge between retail and wholesale inflation, with the latter significantly overshooting the former. High core WPI and CPI inflation continues to weaken the case for a rate cut in the foreseeable future,” said Upasna Bhardwaj, senior economist at Kotak Mahindra Bank.
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