India’s wholesale prices continued to fall in January 2016 — with the pace of price decline touching 0.9 per cent from 0.73 per cent in December — marking the fifteenth successive month of contraction in the wholesale price index for inflation.
Experts said that the surge in the pace of price decline was driven by the global meltdown in commodity prices impacting energy and manufactured product costs. While food articles continued to see a rise in prices, the pace slowed down from 8.17 per cent in December 2015 to 6.02 per cent in January.
Official data released Monday also included a revision in the wholesale price inflation numbers for November 2015 from -1.99 per cent earlier to -2.04 per cent.
Within primary articles, inflation accelerated in non-food articles from 7.7 per cent in December 2015 to 8.24 per cent in January 2016. The fuel and power segment continued to see a pullback in prices at the wholesale level, shrinking by 9.21 per cent in January compared to a negative growth of 9.15 per cent in December. “The persistence of deflationary conditions indicate a continued moderation in demand. Combined with two consecutive months of negative growth in the index of industrial production it points to a strain in industrial activity,” said A. Didar Singh, secretary general of industry body FICCI.
CII director general Chandrajit Banerjee said that the wholesale price inflation has been in the red for more than a year, even though the contraction has somewhat moderated.
“What is notable is that the trajectory of core inflation, which is considered to reflect the demand side pressures in the economy, continues to be sluggish,” he said.
With the Union Budget due in two weeks, Mr. Singh said the government should not shy away from recalibrating the fiscal deficit target in order to push public investments with a view to add productive capacity to the economy. While industry expressed hope that the prolonged period of benign inflation would induce the Reserve Bank of India to chip in with further easing of the monetary policy to revive growth, the RBI will use the consumer price inflation, which surprisingly surged up to 5.69 per cent in January, for its policy framework.
The divergence in consumer price inflation and wholesale price inflation was driven largely by prices for pulses shooting up in January.
