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Below are Views On Wholesale Price Index numbers for January 2021 By Prof. Krupesh Thakkar, CFA, HoD - Financial Markets, ITM B-School

“India's WPI inflation has come at 2.03% for January 2021 vs 1.22% in December 2020. On a month-to-month (m-o-m) basis, it has increased by 1.1%. This is on a slightly higher side owing largely to rise in inflation of manufactured products (the largest component in WPI at ~ 64.3%). The manufacturing group price index rose by 5.13% in January 2021 vs 4.24% in the previous month. On a m-o-m basis, too it has increased by 1.5%. With industry openings and demand rising, the price rise (on a m-o-m basis) is being seen in the higher weightage segments like food products (+0.8%), textiles (+3.5%), Chemicals (+0.9%) and Basic Metals (+5.5%).

Though, the fuel and power group yearly inflation is at negative -4.78% (owing to favorable base impact), the m-o-m basis, it has shot up by worrying 5.8% (auto fuel prices). Some respite has come from WPI of the primary articles group which has gone down by 1.8% on a m-o-m basis, showing yearly inflation rate of -2.24%. However, the finished food products price index as mentioned earlier has gone up. Though RBI tracks CPI for their policy decision, the WPI figures are seen as a leading indicator for the upcoming CPI figures. And we are already expecting the CPI to inch a bit in the last two months of FY21.”

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