Rising prices of petrol and diesel fuelled WPI inflation to 3.4% in December 2016, reversing the declining trend and neutralising the impact of softening prices of vegetables. Also, hardening prices of manufactured items during the month may refrain RBI from cutting rates in its policy review on February 8.
The wholesale price index-based inflation, reflecting the annual rate of price rise, in November stood at 3%. In December 2015, it was (-)1.06%.
WPI inflation in vegetables, at (-)33% in December, saw deflationary pressure for the fourth consecutive month. This was helped by a substantial price fall in onions, which stood at (-)37%.
While the prices of diesel shot up by 20%, petrol became dearer by 9%.The overall inflation index of fuel and power segment registered an increase of 8.7% in December. Besides fuel items, sugar, potato, pulses and wheat became expensive during the month. Overall, the food basket witnessed contraction, with inflation at (-)0.7% in December as against 1.5% in November.