The Narendra Modi government on Tuesday released the data on the wholesale price index and the news is alarming for the masses. The WPI inflation rose to 2.59 per cent in December from 0.58 per cent in November, the official data said. The soaring inflation was attributed to the high food prices. The annual inflation, based on monthly wholesale price index (WPI), was at 3.46 per cent during the same month a year ago (December 2018). The rate of price rise for food articles rose to 13.12 per cent during December as against 11 per cent a month earlier, while for non-food articles it rose nearly four-fold to 7.72 per cent from 1.93 per cent in November, showed the data released by the Ministry of Commerce and Industry on Tuesday.
Among food articles, vegetable prices surged by 69.69 per cent mainly on account of onion, which witnessed 455.83 per cent jump in prices, followed by potato at 44.97 per cent. The consumer price index based retail inflation, as per data released on Monday, spiked to over a 5-year high of 7.35 per cent in December due to costlier food products.
Consumer price inflation rose to 7.35 percent in December 2019, compared to 5.54 percent in November, according to data released by the Ministry of Statistics and Program Implementation on Monday. At current levels, inflation is at its highest since July 2014. Vegetables inflation in December 2019 surged to 60.5% as against 36% in November. Earlier, the median forecast in the Reuters poll of nearly 50 economists predicted India's annual consumer inflation rose to 6.20% in December from November's 5.54%. The RBI is mandated to keep the headline inflation in the 4-6% band. Citing inflation concerns, the RBI kept interest rates unchanged in December following five cuts totaling 135 basis points earlier in the year.
The retail inflation based on Consumer Price Index (CPI) was 2.11 per cent in December 2018 and 5.54 per cent in November 2019. As per the government data, the food inflation rose to 14.12 per cent in December as against (-) 2.65 per cent in the same month of 2018. It was 10.01 per cent in November 2019. The central government has mandated the Reserve Bank of India to keep inflation in the range of 4 per cent with a margin of 2 per cent on the either side.
As per the rates of the vegetables are concerned, the prices of Onion literally brought tears to the eyes of consumers as retail prices touched Rs 200 per kilogram and tomato too turned pricier in the last quarter of 2019, leaving many scurrying for changes in dietary ways as costly food items pushed retail inflation to a more than three-year high.
Though well below the price jump seen for the humble 'daily consumable bulb' and tomato, potato also become costlier as crop damages and disruptions stoked supply crunch. Albeit for a brief period during monsoon and afterwards, retail price of tomato went up to Rs 80 per kg. Though trailing behind in the price race, potato joined its buddies of the 'TOP' priority grouping, selling for as high as Rs 30 a kg in retail market for sometime in December due to supply disruptions before moderating to the current level of around Rs 20-25 a kg.
Costlier vegetables slowly pushed retail inflation, which had remained well within the Reserve Bank's comfortable level of 4 per cent during most part of 2019, peaked to more than three-year high of 5.54 per cent in November.
Tomato, Onion, Potato (TOP) have been accorded 'TOP' priority by central government in 2018-19 Union Budget and a Rs 500 crore Operation Greens was okayed in November last year to boost production and processing of these three commodities to check price volatility in these key kitchen staples.
For most part of 2019, the government was successful in price control but the party seemed to have lost the sheen later in the year, thanks to 'TOP' and other food items.