based on the Wholesale Price Index
(WPI) eased to 3.6 per cent in December, reversing a four-month run-up. In November, WPI inflation
was at 3.9 per cent. The dip was led by an easing in food inflation, and mildly lower core inflation
— the latter reflecting weak pricing power of manufacturers. Fuel inflation
surged higher, while manufactured products’ inflation
stayed unchanged for the third month in a row.
Curiously, the two inflation
measures — WPI and Consumer Price Index
(CPI) — saw a divergence in December. CPI inflation
rose to 5.2 per cent, from 4.9 per cent in November, driven by three factors — One, vegetables inflation, which eased at the wholesale price level but firmed up at the consumer price level; two, housing inflation, which is tracked under the CPI
and surged, reflecting the impact of higher house rent allowances paid to government employees; and three, inflation
in personal care and effects, which is also measured under the CPI
and rose mainly due to higher taxes on services under the goods and services tax regime.
In the first three quarters of this fiscal year, WPI inflation
has averaged 2.9 per cent, compared with 0.7 per cent in the corresponding period a year ago. Most of the pick-up is due to higher oil and commodity prices, though lower food inflation
has capped the upside. Food inflation
dipped to 2.3 per cent, compared with 6.3 per cent, while fuel inflation
rose to 9.7 per cent, from -6.5 per cent, and manufactured inflation
rose to 2.6 per cent, from 0.7 per cent.