WPI inflation in negative territory for 5th month straight

The Wholesale Price Index (WPI) inflation stayed in the negative territory for the fifth straight month in August 2023 at -0.52% against -1.36% recorded in July 2023, the Ministry of Commerce & Industry data released today shows. The month-over-month change in the WPI index for August 2023 stood at 0.33% compared to July 2023.

The negative rate of wholesale inflation has been primarily attributed to the fall in prices of mineral oils, basic metals, chemical & chemical products, textiles, and food products.

The index numbers and inflation rate for the past three months of all commodities and WPI components show primary articles recorded wholesale inflation of 6.34% in August, while the WPI in fuel & power was recorded at 6.3%. In manufactured products, the WPI was recorded at 2.37%. The food index saw an inflation rate of 5.62% in August, according to the data.

On a month-over-month basis, the primary articles index declined 0.47% in August 2023 as compared to July 2023. Prices of crude petroleum and natural gas (5.25%), minerals (3.56%), and non-food articles (0.25%) increased in August 2023 as compared to July 2023. Food article prices declined by -1.52% in August 2023 compared to July 2023.

In fuel & power, the index surged 2.96% in August 2023 on a MoM basis, while prices of mineral oils (4.02%) and electricity increased 1.79% in August 2023.

The manufactured products index surged 0.14% in August 2023 vs July. Out of the 22 NIC two-digit groups for manufactured products, 15 saw an increase in prices and 6 saw a decrease.

The increase in price is mainly contributed by food products; electrical equipment; computer, electronic & optical products; other manufacturing; printing & reproduction of recorded media; motor vehicles, and trailers & semi-trailers.

Some groups that saw a decrease in prices are chemical & chemical products; paper & paper products; machinery & equipment; fabricated metal products, except machinery & equipment; pharmaceuticals, medicinal chemical & botanical products; and furniture, etc., in August 2023 compared to July 2023.

The wholesale inflation in the food index consisting of 'food articles' from the primary articles group and 'food product' from the manufactured products group decreased from 7.75% in July 2023 to 5.62% in August 2023.

On the retail front, inflation eased to 6.83% year-on-year in August 2023 from a 15-month peak of 7.44% in July, though breaching the Reserve Bank of India's (RBI) 6% upper tolerance limit.

Headline inflation, measured by the Consumer Price Index (CPI), fell to 7.02% in rural areas in August from 7.63% in July. Inflation in urban areas dropped to 6.59% in August from 7.20% in the previous month.

The consumer food price index (CFPI) fell to 9.94% in August from 11.51% in July, with the food price index falling in both the rural and urban categories.

All-India year-on-year inflation rates data for August 2023 shows fruit and vegetable inflation at 4.05% and 26.14%, respectively. The retail inflation in pulses and products and spices categories was at 13.04% and 23.19%, respectively. The inflation in food and beverages, and pan, tobacco, and intoxicants category was recorded at 9.19% and 4.10%, respectively.