WPI inflation at 8-month high - Angel Broking

The Wholesale Price Index (WPI) based inflation during October 2013 came in line with expectations at 7.00% as compared to 6.46% in the previous month.

The headline print inched higher owing mainly to higher food inflation as well as pick up in core inflation to a six-month high.

Food inflation continued to remain elevated at 18.19% as compared to 18.40% in September 2013 mainly due to the persistence of high vegetable and fruit prices for the fourth consecutive month.

Core inflation also paced up to a six-month high at 2.6% as compared to 2.1% in the previous month and 5.2% in October 2012. It likely reflects the pass through of higher input costs in the manufacturing sector despite weak pricing power.

Worryingly, the August 2013 inflation has been revised higher by 90bp on the back of upward revision across major components and we believe that there is a possibility of the September 2013 print also being revised upwards.

We are watchful for additional data points on inflation as well as movement in the currency since these are likely to continue determining policy action.

Source : Equity Bulls

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