WPI Inflation Update – July 2012 - Angel Broking

July inflation eases to 6.87%

Key highlights

- Wholesale price Index (WPI) inflation for the month of July 2012 eased to 6.87% as compared to 7.25% in June 2012 and 9.36% in July 2011 on a year-on-year (y-o-y) basis.

- On a month-on-month (m-o-m) basis, headline WPI inflation grew at 0.4% during July 2012 over the previous month.

- WPI inflation, on a m-o-m annualized basis, grew by 4.4% in July 2012 as compared to 2.2% in June 2012.

- Decline in the headline inflation rate is driven by a moderation in food and fuel prices as well as a high base effect.

Trends in Inflation for the month of July 2012

Inflation in Primary Articles decelerated marginally to 10.39% during the month of July 2012 as compared to 10.46% in the previous month. Prices of food articles grew at 10.06% during the month as compared to 10.81% in June 2012. While food-grain prices continued to witness an upsurge, rise in prices of fruits and vegetables marked a significant decline from 17.8% in June 2012 to 10.51% in July 2012. Non-food articles marked an increase of 13.05% in July on the back of an increase in prices of guar seeds and oilseeds. Mineral prices witnessed a deceleration from 14.49% in June 2012 to 8.43% in July 2012 supported by an easing of crude oil prices.

Fuel and Power Inflation recorded a surprising decline to 5.98%, as compared to 10.27% in June 2012; after having increased at levels above the 10% mark since February 2010. Moderation in fuel price index can be attributed to a deceleration in price rise of mineral oils such as LPG, kerosene, high speed diesel and light diesel oil. Inflation in Manufactured Products inched up by over 50 basis points from 5% in June 2012 to 5.58% in July 2012. The rise in prices of manufactured products has led to an increase in core inflation in the economy which had moderated to below 5% levels during the previous five months.

Source : Equity Bulls

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