Wholesale Inflation in August Declines

New Delhi: With the reduction in the prices of manufactured products as well as some food items, India’s wholesale price index or WPI-based inflation for August softened to a 4-month low of 1.31 per cent on an annual basis as compared to 2.04 per cent in July, while it was (-) 0.46 per cent in August last year. In June, the WPI inflation rose to 3.36 per cent, and it was at 3.43 per cent in May, the data released by the ministry of commerce & industry showed on Tuesday.

“Positive rate of 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 & equipment etc. Inflation in food items was 3.11 per cent in August against 3.45 per cent in July. This was led by declining prices of vegetables, which dropped 10.01 per cent in August,” the ministry said in a statement.

However, the price of potatoes and onions continued to be high at 77.96 per cent and 65.75 per cent, respectively in August. “Inflation in manufactured products was 1.22 per cent in August, while the fuel and power category witnessed deflation of 0.67 per cent in August against inflation of 1.72 per cent in July,” the statement added.

“The WPI inflation eased to a four-month low of 1.3% 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 in the month vis-à-vis July 2024,” said Rahul Agrawal, senior economist at ICRA Ltd.

However, ICRA said that the core WPI inflation dipped to 0.7 per cent in August 2024 from 1.2 per cent in July 2024, amidst a continued softening in global commodity prices. “While kharif sowing has been healthy so far, the surplus rainfall in the ongoing month can potentially delay the Kharif harvesting and/or impact such yields, even as reasonably healthy reservoir storage at pan-India level is likely to boost the sowing of rabi crops,” Agrawal said, adding “global commodity prices have remained benign through September 2024 so far, which is likely to contain the sequential momentum in the non-food WPI.”