India's wholesale inflation hit a four-month low of 1.31% in August 2024, with the fuel and power, core (non-food manufacturing), and crude petroleum and natural gas sub-groups together pulling down the headline WPI print by as much as 70 bps against July 2024, government data released on Tuesday showed.
"The annual rate of inflation based on all India Wholesale Price Index (WPI) number is 1.31% (Provisional) for August 2024 (over August 2023)," says the Ministry of Commerce and Industry.
The positive rate of wholesale inflation in August 2024 is primarily due to an increase in prices of food articles, processed food products, other manufacturing, manufacture of textiles and manufacture of machinery and equipment.
The wholesale inflation stood at 2.04% in July 2024 and 3.43% in June 2024, the data shows. The core WPI inflation dipped to 0.7% in August 2024 from 1.2% in July 2024, amidst a continued softening in global commodity prices.
The WPI-food inflation print eased slightly to a 10-month low of 3.3% in August 2024 from 3.6% in July 2024, amid a sharp sequential decline in the primary food articles index.
"While prices of most food items have eased further on a Month-on-Month basis in September 2024, an adverse base would push up the YoY inflation prints for the primary food articles category significantly in the ongoing month (+11.4%/+3.8% in August 2023/September 2023). This would exert upward pressure to the headline WPI inflation print for September 2024," says Rahul Agrawal, Senior Economist at ICRA.
The economist says while kharif sowing has been healthy so far, the surplus rainfall in the ongoing month can potentially “delay” the kharif harvesting and impact such yields.
However, healthy reservoir storage at the pan-India level is likely to boost the sowing of rabi crops. "Global commodity prices have remained benign through September 2024 so far, which is likely to contain the sequential momentum in the non-food WPI. Additionally, the price of the Indian basket of crude oil has averaged 6.0% lower in September 2024 on a sequential basis, while touching the lowest levels in 33 months, which would also help contain the uptick in the headline WPI inflation print in the month. Overall, ICRA expects the WPI inflation to rise to ~2.0% in September 2024 from 1.3% in August 2024," says Agrawal.
India's retail inflation, measured in the All India Consumer Price Index (CPI), surged to 3.65% in August 2024 compared to 3.54% in July 2024, the government data released on September 12 shows. The food and beverages inflation print rose to 5.3% in August 2024 from 5.1% in July 2024, led by an uptick in perishables such as vegetables and fruits. India's CPI inflation had eased to an almost 5-year low of 3.54% in Jul’24 against 5.08% in June, smoothened in part by a base effect. Also, this was the first time in the last five years that CPI inflation dropped lower than the RBI’s target of 4%.
The Reserve Bank of India (RBI) in its latest monthly bulletin warned that if food inflation persists a more cautious monetary policy approach is warranted to squelch the propagation of food inflation pressures into a more generalised inflation.
Leave a Comment
Your email address will not be published. Required field are marked*