The annual rate of inflation is 11.39% (Provisional) for the month of August 2021 (over August 2020) as compared to 0.41% in August 2020. The high rate of inflation in August 2021 is primarily due to the rise in prices of non-food articles, mineral oils; crude petroleum & natural gas; manufactured products like basic metals; food products; textiles; chemicals and chemical products etc. as compared to the corresponding month of the previous year, the data released by the Ministry of Commerce & Industry showed.
The month over month change in the WPI index for the month of August 2021 (as compared to July 2021) was 1.04%.
The Food Index consisting of 'Food Articles' from the Primary Articles group and 'Food Product' from Manufactured Products group have increased from 159.3 in July, 2021 to 159.6 in August, 2021. The rate of inflation based on WPI Food Index decreased from 4.46% in July, 2021 to 3.43% in August, 2021.
Aditi Nayar, Chief Economist, ICRA said, “In spite of the primary food articles slipping into disinflation and a favourable base, the WPI inflation posted a surprise uptick to 11.4% in August 2021, taking some sheen off the welcome easing displayed by the CPI inflation in the same month. The headline and core-WPI inflation are expected to print in double-digits until October 2021, and then halve by the end of the year. The mild uptick in the August 2021 WPI print does not alter our expectation of a status quo in the upcoming October 2021 MPC review.”
Month over Month Change in Major Groups of WPI:
i. Primary Articles (weight 22.62%): - The index for this major group increased by (1.56%) to 155.8 (provisional) in August, 2021 from 153.4 (provisional) for the month of July, 2021. Prices of Minerals (12.22%), Non-food Articles (6.18%) and Crude Petroleum & Natural Gas (1.51%) increased in August, 2021 as compared to July, 2021. Prices of Food Articles (-0.25%) declined in August, 2021 as compared to July, 2021.
ii. Fuel & Power (weight 13.15%): - The index for this major group increased by (1.49%) to 116.0 (provisional) in August, 2021 from 114.3 (provisional) for the month of July, 2021. Prices of Mineral Oils (2.31%) and Coal (0.31%) increased in August, 2021 as compared to July, 2021. Prices of electricity remain unchanged.
iii. Manufactured Products (weight 64.23%): - The index for this major group increased by (0.76%) to 133.0 (provisional) in August, 2021 from 132.0 (provisional) for the month of July, 2021. Out of the 22 NIC two-digit groups for Manufactured Products, 14 groups have witnessed increase in prices; 6 groups have witnessed decrease and for two groups the prices remained unchanged in August, 2021 as compared to July, 2021. The increase in prices in mainly contributed by manufacture ofbasic metals; food products; chemicals and chemical products;electrical equipment and manufacture of textiles.Some of the groups that have witnessed decrease in prices are manufacture ofother manufacturing; pharmaceuticals, medicinal chemical and botanical products; leather and related products; other transport equipment and tobacco productsin August 2021 as compared to July 2021.