Institutional Equity Research

India Economics WPI Update | July 15, 2019

WPI Softens to 2.02% on Lower Manufacturing Inflation

ff India’s inflation – based on Wholesale Price Index (WPI) – declined to 2% in

Jun’19 from 2.5% in May’19, below with the consensus expectation of 2.3%.

ff Fuel prices declined to -2.2% in Jun’19 from 1% in May’19. We expect the

current cool-off in the fuel prices to continue owing to muted demand.

ff Food inflation remained flat at 7% YoY in Jun’19 owing to higher prices of

cereals, onions and pulses. We feel that food inflation shall continue to
move northwards, going ahead on the back of lower base and evolving
monsoon conditions.

ff Manufacturing inflation eased to 0.9% from 1.2% in May’19 on account of

depressed commodity prices. The prices of vegetable oil and fats, basic
metals, leather products and steel contributed negatively. Liquidity and
global growth concerns warrant a softer manufacturing inflation print in
the short term.

ff In our view, the WPI is expected to remain soft at current levels in the
short-to-medium-term, and increase gradually to sub-4% level, going
ahead on account of higher food and manufacturing inflation.

Economist : Samiksha Punamiya

Contact : (022) 3303 4636
Email : [email protected]

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Inflation trend for last six months

Commodities/Major Groups/Groups/Sub-Groups” Weight Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19
ALL COMMODITIES 100.00 2.76 2.93 3.10 3.24 2.45 2.02
PRIMARY ARTICLES 22.62 3.00 4.77 4.91 6.58 6.16 6.72
Food Articles 15.26 2.41 4.21 5.24 6.44 6.99 6.98
Cereals 2.82 8.30 9.76 8.92 8.43 7.90 7.93
Paddy 1.43 3.59 3.37 2.62 2.41 2.20 2.92
Wheat 1.03 9.94 12.29 10.13 7.52 6.35 5.38
Pulses 0.64 7.47 10.80 10.63 14.32 18.36 23.06
Vegetables 1.87 -4.08 6.58 24.05 31.34 33.15 24.76
Potato 0.28 26.93 21.55 2.53 -16.22 -23.36 -24.27
Onion 0.16 --65.60 --58.00 -31.34 -3.26 15.89 16.63
Fruits 1.60 -4.53 -3.65 -7.69 -6.88 -3.51 1.87
Milk 4.44 2.21 1.64 1.78 1.42 1.13 0.91
Eggs, Meat & Fish 2.40 5.47 6.76 5.86 7.85 5.64 5.64
Non-Food Articles 4.12 2.32 2.07 3.00 6.06 6.23 5.06
Oil Seeds 1.12 8.59 6.30 4.90 6.79 7.26 9.25
Minerals 0.83 14.20 18.42 -0.22 12.70 6.48 28.25
Crude Petroleum 1.95 0.55 7.02 6.22 2.11 -7.85 -6.95
FUEL & POWER 13.15 1.85 1.72 4.59 3.84 0.98 --2.20
LPG 0.64 -7.47 --10.60 0.94 11.11 13.26 6.84
Petrol 1.60 -3.35 -2.81 1.78 1.86 -1.02 -5.73
HSD 3.10 1.90 3.83 7.33 3.24 0.94 -2.36
MANUFACTURED PRODUCTS 64.23 2.79 2.34 2.16 1.89 1.28 0.94
Manufacture of Food Products 9.12 1.26 1.66 0.39 1.17 1.57 1.48
Manufacture of Vegetable And Animal Oils and Fats 2.64 2.04 1.76 -2.82 -4.45 -5.67 -6.72
Sugar 1.06 --5.80 -2.98 -2.23 5.11 11.61 4.01
Manufacture of Tobacco Products 0.51 -0.33 0.33 2.33 3.23 1.54 2.85
Manufacture of Textiles 4.88 5.03 4.75 3.85 3.92 3.46 2.67
Manufacture of Wearing Apparel 0.81 -0.07 -0.79 0.44 -1.07 -0.43 -0.72
Manufacture of Leather and Related Products 0.54 0.92 -1.16 0.17 -1.63 -2.13 -3.17
Manufacture of Wood And of Products of Wood and Cork 0.77 2.76 3.50 2.82 1.21 0.67 1.43
Manufacture of Paper and Paper Products 1.11 4.26 2.73 2.91 2.57 1.56 1.15
Manufacture of Chemicals and Chemical Products 6.47 4.82 4.00 3.55 3.10 1.96 1.45
Manufacture of Rubber and Plastics Products 2.30 2.71 2.14 2.32 1.11 0.65 0.18
Manufacture of other Non-Metallic Mineral Products 3.20 1.75 2.98 2.28 1.73 2.42 2.60
Manufacture of Cement, Lime and Plaster 1.64 0.96 1.99 3.26 4.62 6.64 7.22
Manufacture of Basic Metals 9.65 3.57 2.02 1.37 0.09 -2.23 -3.72
Mild Steel - Semi Finished Steel 1.27 1.14 0.41 0.00 -0.81 -3.11 -4.76
Manufacture of Fabricated Metal Products, Except Machinery 3.15 4.49 3.57 4.29 4.75 3.82 2.02
and Equipment
Manufacture of other Transport Equipment 1.65 0.71 0.44 2.63 3.44 3.99 5.70
Source: MOC, Rsec Research

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Digitally signed by NAVEEN KULKARNI

NAVEEN
DN: c=IN, o=Personal,
2.5.4.20=0c1ff234f79bd813e0368a6dc0
3b4ca15b14b3b5a481882c186a1ef7b63
30566, postalCode=400072,

KULKARNI
st=MAHARASHTRA,
serialNumber=97c18031b020ff979ee60
7a3efa48cfba8b1455defbde1b85beecbf
bf99bbde3, cn=NAVEEN KULKARNI
Date: 2019.07.15 12:45:53 +05'30'

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