April's WPI-based inflation eases to 3.85%, industrial output grows by 2.7%

Lena Tucker
May 15, 2017

Inflation based on the wholesale price index slipped to a four-month low of 3.85 percent in April as both food articles and manufactured items showed cooling in prices.

India's industrial output rose 2.7 percent in January from a year earlier, government data showed on Friday.

For cereals and products, the rate of price rise in April, at 5.06 per cent, was lower than 5.38 per cent in the previous month.

Consumer prices, the RBI's main policy target, likely rose 3.49 per cent in April, according to a Reuters poll of economists, compared with an increase of 3.81 per cent in March.

Food price inflation for urban areas stood at 0.46 per cent in April 2017 against 2.42 per cent in March and 5.97 per cent in April a year ago.

The Central Statistics Office (CSO) revamped the index of industrial production on Friday by shifting to a new base year, deleting "irrelevant" items such as calculators, gutka and colour picture tubes, and inducting new items to better reflect changes in the industrial sector over the years.

As per the last data, IIP for the month of February fell by 1.2% on year-on-year basis, as against the estimate of 1.3%.

As per the data released today, inflation in food articles was 1.16 percent in April, lower than 3.82 percent in March. The 2004-05 series had 620 items (397 item groups).

Wholesale inflation in the fuel and power segment was 18.52 per cent, while that of manufactured products was 2.66 per cent in April. 173 new items has been added under manufacturing goods. However, even that was slower than the 5.5% IIP growth seen in March 2016.

Similarly, he pointed out that the release of new WPI data on the 2011-12 base, makes it more comparable with the CPI which has 2012 as the base.

Factory production, measured on a new, more recent base year, grew more robustly and in a less volatile manner than had been presumed in the year to March, indicating that an industrial turnaround may be under way. The corresponding figures for March read (-) 12.42 per cent and (-) 7.24 per cent. The manufacturing sector growth rate was 1.2% compared with 1.3% based on the old series.

Talking to media Chief Statistician T C A Anant said the IIP base year has also been changed to ensure that it remains more relevant. This revision in the base year was long pending and brings the WPI numbers in consonance with other key macro parameters. The weightage of electricity in IIP under the new series has declined to 8% from 10.3%.

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