India's wholesale inflation, measured through wholesale price index (WPI), declined to 12.41% in August, compared with 13.93% in July, shows government data shared by the commerce ministry on Wednesday.

Wholesale inflation remains in the double digits for the 17th month in a row since April 2021.

Inflation in August is primarily contributed by rise in prices of mineral oils, food articles, crude petroleum & natural gas, basic metals, chemicals & chemical products, electricity, food products etc. as compared to the corresponding month of the previous year, the ministry says.

WPI inflation of food articles rose to 12.37% in August compared with 10.77% in July. Prices of vegetables jumped 22.29% in August compared with 18.25% in July. The rate of price rise in wheat was 17.35% while for milk it stood at 4.78%.

In the fuel and power basket, inflation was 33.67% in August, as against 43.75% in July. Prices of electricity increased in August as compared to July 2022.

In manufactured products, WPI inflation was 7.51%. The increase in prices is mainly contributed by other non-metallic mineral products, motor vehicles, trailers & semi-trailers, electrical equipment, pharmaceuticals, medicinal chemical & botanical products, computer, electronic & optical products, machinery & equipment, wearing apparel, paper and paper products, etc in August, 2022 as compared to July, 2022.

Some of the groups that have witnessed decrease in prices are food products, textiles, chemical & chemical products, rubber & plastic products, furniture, and other manufacturing, etc. in August, 2022 as compared to July, 2022.

This comes two days after India's retail inflation, measured via Consumer Price Index (CPI), rose to 7% in August, likely due to uneven monsoon progression in the country. The Consumer Food Price Index (CFPI), which measures the change in retail prices of food items, or inflation in food basket in August 2022 stood at 7.62% in August 2022 against 6.69% (final) in July 2022 and 3.11% in August 2021.

In a bid to tame rising food prices of essential commodities, the central government has banned exports of food items like rice, wheat flour, tur dal (red gram). However, the prices remain high due to inflationary pressures that have stemmed from the Russia-Ukraine war and subsequent rises in fuel and commodity prices.

“With the consequent easing of imported inflation pressures, India’s CPI inflation has peaked in April 2022. Further, the average Indian basket crude price in August at $97.4 per barrel has turned out to be lower than what we had assumed for the full year - $105 per barrel - in the monetary policy resolution of August 5,” RBI governor Shaktikanta Das said earlier this month.

India’s inflation is lower than a large number of its trading partners, he added.

While the incoming monthly inflation prints in the near-term could be bumpy, Das expects it to moderate in the second half of 2022-23, and then move within the tolerance band in Q4 and then even lower in the first quarter of 2023-24.

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