Wholesale Price Index (WPI) of India

Food and fuel soften wholesale price inflation in Feb '18.

Published monthly by Ministry of Commerce and Industry. Updated until the month of February 2018. (Published on March 14th, 2018) 
Note: WPI Food Index consists of ‘Food Articles’ from Primary Articles group and ‘Food Product’ from Manufactured Products. Core WPI represents non-food manufacturing.

Recent Data Trend

The Wholesale Price Index (WPI) inflation continued to ease, reaching a seven-month low of 2.5% year on year (YoY) in Feb '18 from 2.8% YoY in the previous month. The slowdown in inflation was brought about by the fall in food inflation to 0.1% YoY. The temporary softening of prices of vegetables, potato and a steady fall in the prices of pulses has helped keep inflation low for the past few months.

In addition, the inflation in the fuel group declined marginally to 3.8% YoY in Feb '18, from the 4.1% YoY growth in the previous month. However, this can be attributed to the favorable base effect. From next month onwards, we are likely to see a pickup up in the fuel group inflation due to the strengthening of crude oil prices.

The manufacturing group, on the other hand, witnessed an increase in inflation to a 10-month high of 2.8% YoY.

We believe one needs to look at the headline number with caution. The sustainability of the subdued headline inflation numbers is doubtful as the core WPI inflation depicts that inflation among the non-food manufactured products rose to a 42-month high of 3.9% YoY. This is indicative of the underlying price pressures, mainly rooted in the increasing input prices as highlighted in the RBI's Industrial outlook survey.

The easing inflation at the wholesale and retail level may provide some room for RBI to hold policy rates in the Apr '18 meet, but inflation is likely to quicken in the near future. We feel RBI may go for a rate hike in the Jun'18 meet if upside pressures to inflation materialize in the next few months.

Brief Overview

Wholesale Price Index (WPI) represents the price of representative commodity basket of 697 items at the wholesale level i.e. goods traded in bulk and between organizations, not the end consumers. It is a measure of inflation at the wholesale level. The major components of WPI include Manufactured Products, Primary Articles, Fuel, and Power in the decreasing order of weight-age to the stated components. The purpose of the WPI is to monitor price movements that reflect supply and demand in industry, manufacturing, and construction. This helps in analyzing both macroeconomic and microeconomic conditions.

The WPI inflation has remained in the negative zone for the entire year of 2015 owing to the weak global prices of oil. The wholesale prices fell by 5.1% in August 2015, the highest fall of all time.

The  Office of the  Economic  Adviser in the  Department of  Industrial  Policy and Promotion,  Ministry of  Commerce  &  Industry is responsible for compiling  WPI and releasing it. Since 1947 the index is being published regularly. The latest series of WPI uses the base year as 2011-12.

For more information please visit the official website.  

Wholesale Price Index, Sub-group: Manufacturing

Wholesale Price Index, Sub-group: Primary Articles

Wholesale Price Index, Sub-group: Fuel and Power

Next Release Date: April 14th, 2018

Wholesale Price Index-Quarterly