April wholesale inflation increases 3.85 pct

Posted May 13, 2017

While WPI inflation slipped to 3.85% in April, the industrial production went up to 2.7% in March, from 1.9% in the previous month, according to the new series with 2011-12 base year.

"As for the inflation numbers released today, both wholesale index based inflation rate and retail prices reported moderation in April 2017".

The poll of more than 30 economists predicts inflation fell to a three-month low of 3.49 percent in April from 3.81 percent the previous month.

India's factory output or Index of Industrial Production (IIP) grew 2.7% in the month of March 2017 as against a drop of 1.2% in February 2017.

For 2016-17, factory output grew by 5 per cent as against 3.4 per cent in the year-ago period. The new Index of Industrial Production, IIP series captures work in progress for capital goods to avoid volatility. Since the GVA doesn't factor in indirect taxes, removing the excise duty component from the WPI in manufactured goods is only natural.

"The new WPI series indicates a sustained trend of lower annual inflation rates when compared with the rather dated 2004-05 base, underscoring the importance of regular updation of the base to ensure that policy makers have access to timely and accurate information while framing policies in a dynamic economic environment", Aditi Nayar, principal economist with ICRA, said.

The Wholesale Price Index (WPI) series in India has undergone six revisions in 1952-53, 1961-62, 1970-71,1981-82, 1993-94 and 2004-05 so far.

In the new series, manufacturing sector's weightage has been increased to 77.6 percent from 75.5 percent. However, even that was slower than the 5.5% IIP growth seen in March 2016.

The base year was revised from 2004-05 to 2011-12.

At a broad level, the new series has a total of 809 items in the manufacturing sector.

"The worldwide recommendation is for a revision of these indices every five years, and so we are trying to stick to that", Statistics and Programme Implementation Secretary TCA Anant said on Friday while announcing the changes.

India changed the base year for the country's gross domestic product (GDP) and Consumer Price Index based inflation data about two years ago while continuing with the old base year for other macro indicators.