WPI Inflation May Continue To See A Pick-Up: CARE Ratings

Wholesale prices will continue to see a pick-up in the coming months, especially in the manufacturing segment owing to firming up of global metal prices following the opening up of the economy, CARE Ratings has stated.

"The recent surge in global crude oil prices will also narrow the deflation in the fuel and petroleum segment. Food prices will come down going ahead as kharif crop enters the market. However, the farmer's protests in North India could disrupt supplies to some extent and limit the downside," CARE Ratings has said following the release of the WPI data.

Wholesale inflation firmed up to 9-months high of 1.6% in November 2020 compared with 0.6% in November 2019 and 1.5% in the previous month. CARE Ratings' had estimated wholesale inflation at 1.8% for the month.

"Wholesale inflation has been registering a gradual pick-up in the last 5 months reflective of improvement in the pricing power of the manufacturers. The build-up in wholesale inflation for the month can be ascribed to inflation in the manufacturing basket (weight of almost 2/3rd in the WPI basket) which has risen to a near 2-year high. This pick-up has been chiefly driven by firming up of global metal prices. However, cooling down of wholesale prices in the food basket and persistent deflation in the fuel component capped the upside," CARE Ratings has said.