WPI Increased to 8-months High 

India’s wholesale price inflation (WPI) has increased to 1.48% and reached to the highest level in eight months in the month of October 2020.

Highlights

The Whole sale price inflation was 0% in October 2019 while it stood at 1.32% in September 2020. The WPI has increased for the third consecutive month.

WPI trend for three months

The WPI for August 2020 has been revised to 0.41% from 0.16%. This increase in the inflation is significant because August 2020 is the first month after March 2020 that the WPI has attained the positive growth. Further, the data for October 2020 shows that the trend in August has strengthened with manufactured group inflation reaching to 19-month high of 2.1% and core inflation reaching to the 18 months highest at 1.7%.

Is this a sign of recovery?

There is an increase in core inflation in the month of October. This shows that there is some improvement in demand condition that was highly hit during the  COVID-19 lockdown. The demand is festival-related though. Thus, it would not be to early to see this as a sign of recovery.

What is WPI?

The wholesale price index is an index to measure and track the changes in the price of goods. It measures the changes in the price at the stage when goods are sold in bulk and traded between entities or businesses instead of selling directly to the consumers.  The base year of All-India WPI is 2011-12. This base year was revised in 2017 from the earlier base year of 2004-2005. WPI is published by the Office of Economic Adviser, Ministry of Commerce and Industry.