A worker carries of sacks of potatoes at a wholesale warehouse. (Photographer: Taylor Weidman/Bloomberg)

India’s Wholesale Inflation Moderates To 5.09% In July

India’s wholesale price-based inflation cooled more than expected in July after jumping to a near five-year high in the previous month.

Wholesale inflation in July, measured by the Wholesale Price Index, rose 5.09 percent percent compared with the same month last year, according to data from the Ministry of Commerce. WPI, that tracks changes in the price of goods in stages before the retail level, was pegged at 5.22 percent in July by a Bloomberg poll of economists. While the inflation is on an upswing, it came off June’s multi-year high of 5.77 percent.

The slowing pace of wholesale inflation was largely on the back of easing prices of food articles, especially vegetables and fruits that had been on an upswing due to the seasonal spike in prices. Fuel and power prices remained at elevated levels due to higher crude prices amid rising global trade tensions.

India has been grappling with inflationary pressures for a while now. The country’s monetary policy committee has hiked the key interest rates twice this year—in June and in August—to its highest level in two years for tackling inflationary pressure.

This comes after retail inflation in July rose 4.17 percent, declining from the five-month high of 4.9 percent in June as food prices rose at a comparatively muted pace.

However, an SBI Ecowrap release warned of further divergence in the wholesale and consumer price inflation figures going ahead. “The recent exchange rate disturbances will have more of an impact on WPI than CPI, which is precisely why WPI and CPI have diverged more in recent times,” it said.

Key Highlights

  • Primary articles’ price rose 1.73 percent from last year.
  • Food articles’ price fell 2.16 percent year-on-year.
  • Fuel and power price rose 18.1 percent on a yearly basis.
  • Manufactured products’ price rose 4.26 percent from last year.
  • Onion price jumped 38.8 percent year-on-year.
  • Crude petroleum price surged 57.9 percent on a yearly basis.

Also read: Monetary Policy: Having Hiked Rates As Expected, MPC Now Set For A Pause