India’s wholesale inflation, measured by the Wholesale Price Index (WPI), fell to a 3-month low of 2.04% in July, down from a 16-month high of 3.36% in June, largely due to a significant reduction in food prices. Data from the Ministry of Commerce and Industry revealed that food price inflation dropped to 3.45% in July from 10.87% in June. Within the food category, the contraction in the prices of vegetables (-8.93%) and egg, meat, and fish (-1.59%) significantly eased pressure on factory gate prices. Meanwhile, the prices of onions (88.77%), cereals (8.96%), paddy (10.98%), and pulses (20.27%) showed a slight deceleration, while potatoes (76.23%) and fruits (15.62%) saw an increase.
Other sub-indices, including manufactured products and fuel and power, recorded a modest rise in YoY inflation during July. Inflation for manufactured products, which have a 64.2% weightage in the index, rose to 1.58% from 1.43% in June, driven by higher prices in beverages (2.14%), tobacco (2.31%), textiles (2.09%), wood products (3.53%), and pharmaceuticals (2.05%). The fuel and power segment saw an inflation increase to 1.72%, with cooking gas prices surging by 6.06%. Despite remaining in contraction, prices for high-speed diesel (-1.65%) and petrol (-0.64%) also rose. This easing of factory gate inflation follows a recent reduction in food prices and a high base effect, bringing retail inflation to a nearly 5-year low of 3.54% in July. Although the Reserve Bank of India (RBI) tracks retail inflation for its monetary policy, the WPI decline may help keep it low over time.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
