Economics
Wholesale Price Inflation: April 2016
After being in the negative territory for the past 17 months, the WPI based inflation for April’16 has come
out as positive, ending the deflationary trend (Exhibit 1). WPI for April’16 is estimated to have increased
by 0.34% year on year (provisional) compared to -0.85% for the previous month. The increase in prices of
food articles and manufactured products has contributed to the positive number of inflation.
May 16, 2016
The revised WPI inflation for the month of February’16 is a bit higher from the provisional estimate of (-)
0.91% to (-) 0.85%.
Exhibit 1: WPI Inflation
0.34
0.5
0
-0.5
Nov’15
Dec’15
Jan’16
-1.06
-1.07
Feb’16
Mar’16
-0.91
-0.85
-1
-1.5
Apr’16
-2
-2.5
-2.04
WPI Inflation
Source: MOSPI
The table below captures the trend in WPI for the last six months
Growth in WPI (%)
Group
All commodities
Primary Articles
Food Articles
Pulses
Vegetables
Potato
Non-food Articles
Fuel & Power
Manufactured Products
Sugar
Beverages, tobacco and
tobacco products
Weight (%)
Nov’15
Dec’15
Jan’16
Feb’16
Mar’16
Apr’16
100
20.12
14.34
0.72
1.74
0.20
4.26
14.91
64.97
1.74
-2.04
2.15
5.55
58.09
13.25
-52.87
6.33
-10.99
-1.42
11.22
-1.06
4.58
7.89
55.76
19.50
-35.40
7.84
-9.15
-1.49
-7.51
-1.07
4.30
6.46
45.03
12.71
-17.08
9.35
-9.89
-1.17
-0.55
-0.85
2.03
3.91
38.37
-2.94
-7.39
7.09
-7.06
-0.52
5.23
-0.85
2.13
3.73
34.45
-2.26
3.57
8.09
-8.30
-0.13
6.19
0.34
2.34
4.23
36.36
2.21
35.45
7.12
-4.83
0.71
16.07
1.76
2.23
2.03
2.13
2.91
3.44
6.40
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Economics
 The prices of primary articles that have 20.12% weight in the WPI have gone up marginally from
2.13% in March’16 to 2.34% in April’16.

In April’16, the food inflation has increased by 50 percentage points (4.23%).

Pulses reversed the downward trend of inflation over the past few months. The inflation
in Pulses, that eased in the month of March’16 to 34.45%, spiked again in April’16 to
36.36%.

The prices of vegetables have spiked due to reasons of seasonality. They moved up from
(-) 2.26% in March’16 to 2.21% in April’16, contributing to the positive WPI inflation print.

The prices of potato’s have shot up with inflation increasing from 3.57% in March’16 to
35.45% in April’16, indicating nearly 10 times increase in prices because of fall in
production of potato in West Bengal as well as seasonal shortage.
 Fuel inflation firmed up in the month of April’16 to (-) 4.83% from (-) 8.30% in the previous
month. This increase can be attributed to the petrol and diesel becoming expensive during the
month with marginal oil price hike in the global oil markets owing to reports of reduced oil stocks
in the US.
 The inflation from non-food articles has eased from 8.09% in March’16 to 7.12% in April’16.
 The inflation in the manufacturing segment moved up in the positive zone and has increased from
(-) 0.13% in March’16 to 0.71% in April’16.

The increase in the manufacturing inflation is primarily fueled by triple increase in prices
of Sugar that has spiked from 6.19% in March’16 to 16.07% in April’16. The lower
production of sugar in major producing states such as Maharashtra due to drought
conditions have led to heated prices of the product.

Apart from sugar, the prices of tobacco products have doubled in the month of April’16.
The inflation rate for the industry has increased to 6.40% in April’16 from 3.44% during
the previous month.
CARE’s View
The increase in WPI inflation is a result of demand-supply mismatches. Going ahead, a lot depends upon how the
monsoon progresses that could lead to softening of food prices. Food prices may ease in the coming months as
IMD has forecasted above normal monsoon in this year and kharif output is expected to be good.
The oil prices witnessed short term volatility during the month. The uptick in the prices seems limited as there are
low chances of reduction of oil supply from major oil producing countries. If the monsoon turns favorable this
year then prices will remain moderate.
Wholesale Price Inflation – April 2016
2
Economics
Contact:
Madan Sabnavis
Chief Economist
madan.sabnavis@careratings.com
91-022-67543489
Dr. Rucha Ranadive
Associate Economist
rucha.ranadive@careratings.com
91-022-67543531
Disclaimer
This report is prepared by the Economics Division of Credit Analysis & Research Limited [CARE]. CARE has taken utmost care to ensure
accuracy and objectivity while developing this report based on information available in public domain. However, neither the accuracy
nor completeness of information contained in this report is guaranteed. CARE is not responsible for any errors or omissions in
analysis/inferences/views or for results obtained from the use of information contained in this report and especially states that CARE
(including all divisions) has no financial liability whatsoever to the user of this report.
Wholesale Price Inflation – April 2016
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