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Charts & Analysis

Wholesale Price Inflation at 6.1% for Aug 2013


Wholesale Price Index (WPI) based inflation for August 2013 was at +6.1%, an increase over the previous month’s 5.79%, the highest since Feb 2013.

Monthly WPI Historical Chart

This is now a 1.5% increase in inflation over the May number of 4.58%.

Inflation revisions: June Revised to 5%+

WPI Inflation for June 2013, which was first announced at 4.86%, is now up to 5.16%. This is a large revision, and the first upward one since February.

Inflation Revisions

Components: Food and Fuel are 11%+, Manufactured Goods Still Benign

Inflation Components

Primary articles (mainly food) is now over 11.7% over last year, a massive increase. Fuel inflation remains at 11.34%. Both must be up big because of rupee depreciation, but also because these prices fluctuate often due to supply etc.

Manufactured goods is a story that is difficult to believe, because everything else shows prices going only up. A 1.90% print sounds like they have decided not to update prices at all.

WPI and CPI – the chasm narrows, but is still big



The red line is what you and I are seeing.

The blue line is what the government and RBI *think* we are seeing.

Which apparently, is not eye-to-eye.


  • Raghuram Rajan has said he’ll focus on CPI. That will mean raising rates. Will he raise the 0.25% or more? My feeling is that the repo rate doesn’t matter anymore – overnight rates are already 10.5% and higher. So a marginal increase of less than 1% won’t make a huge difference to us.
  • A high WPI will eat into GDP growth numbers even more. IF we get a sub-4% print, the economy is looking
  • The US might taper but not as much as one assumes. So if the rupee appreciates that’s one less fear of foreigners exiting, which will help the rupee.
  • The rupee is at 62.73, which is a good sign for September.


We are in HORRIBLE shape as an economy. We really need to fix inflation and bring it down to 3% or lesser, and that needs to be our only priority, growth be damned. Even if we induce a recession by doing so. My question for Friday: Will Rajan Do A Volcker?


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