India’s Wholesale Inflation In July Falls To Lowest In 25 Months

India’s wholesale inflation in July fell to its lowest in two years , led by lower fuel and power costs.

Inflation as measured by the wholesale price index fell to 1.08 percent in July—the lowest since June 2017—from 2.02 percent in the previous month, according to data released by the Ministry of Commerce and Industry. A Bloomberg poll of economists had pegged the figure at 1.8 percent.

Retail inflation also fell for the first time in six months at 3.15 percent as urban and rural demand slowed.

Inflation Internals In July

• Primary articles inflation stood at 5.03 percent against 6.72 percent in June.
• Prices of food articles stood at 6.15 percent compared with 6.98 percent in the previous month.
• The index of non-food articles stood at 4.29 percent against 5.06 percent last month.
• Fuel and power index contracted 3.64 percent against a fall of 2.2 percent in June.
• Manufactured products inflation was at 0.34 percent compared with 0.94 percent in June.

Weak commodity prices, a mild appreciation of the rupee and a lack of pricing power contributed to the sharp and fairly broad-based fall in the core WPI inflation in July, according to Aditi Nayar, principal economist at ICRA Ltd.

The WPI inflation is expected to remain muted in the near term, reflecting the continued softness in commodity prices, although a weaker currency may arrest the correction in the landed price of imports, Nayar said. Also, available trends suggest that the fall in wholesale food inflation in July may be temporary, while the rise in gold prices would push up inflation related to other manufacturing, she said.