Wholesale Price Index (WPI) inflation for the month of August rose to 3.74% versus 3.55% in July. The build up inflation rate in the financial year so far was 4.45% compared to a build up rate of 0.23% in the corresponding period of the previous year. The index for the primary articles group declined by 0.2 per cent from the previous month. The primary articles inflation was reported at 7.47% versus 9.38% in July.
Food articles inflation declined sharply to 8.23% versus 11.82% in July. What seems to have led to the increase in the wholesale inflation are manufactured products inflation and fuel and power group inflation. The August WPI for manufactured products rose to 2.42% versus 1.82% in July. Fuel and power group inflation rose sharply to 1.62% versus (-)1% in July.
This comes at a time when the Consumer Price Index (CPI) inflation eased to a 5-month low of 5.05% in August. On October 4, 2016 will be the new RBI governor Urjit Patel’s first monetary policy review, which will also be the first time that the Monetary Policy Committee (MPC) will take a call on rates. With a stiff inflation target of 4%, RBI is likely to maintain a cautious stance and keep key rates unchanged, feel analysts.