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Strengthening of the wholesale prices in 2016-17 also indicates a slow recovery in pricing power of industry | The Times of India

The end of the fiscal year 2016-17 saw the wholesale price index (WPI) slump from a high of 6.6% in February 2017 to 5.7% in March. This is a respite from the persistent hardening of prices in the previous three months. But despite the gain the wholesale price index ended up at a three year high with the price levels bouncing back to 5.7% in 2016-17 after shrinking by 0.45% in 2015-16 and rising by 2% in 2014-15.

The major reason for the pickup in wholesale prices was the uptrend in the global commodity cycle. Consequently, the domestic prices of primary commodities went up from 3% in 2015-16 to 4.6% in 2016-17, again a three year high. But the rise in commodity prices was not uniform. The highest rise was in the fuel and power segment, that accounts for around 15% of the index, which registered an 18.2% increase, the highest rise in more than a decade.

However, the impact of the high rises in fuel and power was partially neutralized by the increase in prices of most agriculture produce. Increase in food prices slumped to a decadal low with inflation levels touching a low of 3.1%.

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Strengthening of the wholesale prices in 2016-17 also indicates a slow recovery in pricing power of industry.