Wholesale inflation eased to 13.93% in July from 15.18% last month
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New Delhi, Aug 16: The wholesale price-based inflation eased to 13.93 percent in July on easing prices of food articles and manufactured products. The Wholesale Price Index-based inflation was 15.18 percent last month and at a record high of 15.88 percent in May.
The WPI inflation continued its declining trend for the second month in July but remained in double-digits for the 16th consecutive month beginning April last year. Inflation in food articles in July eased to 10.77 percent from 14.39 percent in June.
The rate of price rise in vegetables declined substantially to 18.25 percent in July against 56.75 percent in the previous month. In the fuel and power basket, inflation was 43.75 percent in July compared to 40.38 percent in the last month. Inflation in manufactured products and oil seeds was 8.16 percent and (-)4.06 percent, respectively. “WPI stayed at 13.93%. The key reason for the inflation level is rising food, fuel, and vegetable prices. The wholesale inflation level has softened a bit if compared month on month, but it has remained in double digits for 15 straight months. Higher crude oil prices and input costs still weigh on the producers and pass-through has resulted in pushing the retail inflation higher. This move also implies that manufacturers are recovering their pricing power. The global economy is recovering as we witness an increase in demand for metals, oils, crude, and fertilizers. Moving forward, as the crude prices soften in the summer season and supply issues getting resolved will help ease WPI inflation in the next few months," said DRE. Reddy, CEO and Managing Partner at CRCL LLP. The Reserve Bank of India mainly looks at retail inflation to frame monetary policy. Retail inflation remained above the Reserve Bank's comfort level for the seventh month in a row and was at 6.71 percent in July.
To tame stubbornly high inflation, the RBI has hiked the key interest rate three times this year to 5.40 percent. The central bank had projected retail inflation to average 6.7 percent in 2022-23. Economists said they expected the Reserve Bank of India (RBI) to raise its policy rate by at least 25 basis points next month as retail inflation was likely to remain above its tolerance band through this calendar year. The MPC will meet on Sept. 28-30. The RBI's Monetary Policy Committee has lifted the repo rate by 140 basis points since May, including by 50 bps this month, while the government imposed restricted exports of crops, including wheat and sugar, while cutting fuel taxes.