India’s inflation based on the Wholesale Price Index (WPI) declined to 13.93 percent in July, according to data released by the commerce ministry on August 16.
The WPI inflation was 15.18 percent in June, down from an over three-decade high of 16.63 percent in May.
In July 2021, WPI inflation stood at 11.57 percent.
Another month of double-digit increase in wholesale prices in July means WPI inflation has remained above the 10-percent mark for 16 months in a row.
The fall in WPI inflation in July was driven by lower food prices, with food inflation dropping to 9.41 percent, down 300 basis points from June.
Among food items, vegetables saw a sharp month-on-month fall in prices of 12.7 percent. The index for fruits was down 3.0 percent while that for eggs, meat, and fish recording a 2.6 percent fall from June.
On the whole, the food index – which acounts for 24 percent of the WPI basket – was down 2.2 percent sequentially in July. This helped bring down the all-commodity index of the WPI by 0.1 percent from June.
Lower prices of manufactured products also helped bring down WPI inflation last month.
Compared to June, the index for manufactured products was down 0.4 percent in July, suggesting reducing price momentum. At the same time, year-on-year inflation for these products – which make up a massive 64 percent of the WPI basket – fell to a 16-month low of 8.16 percent.
In June, manufactured products inflation had come in at 9.19 percent.
In contrast, fuel and power inflation moved up to 43.75 percent, with the index for the category rising by 6.6 percent from June.
The fall in wholesale inflation in July follows a smaller drop in retail inflation.
Data released last week showed the more closely followed Consumer Price Index (CPI) inflation fell as expected to a five-month low of 6.71 percent in July.
However, the drop in CPI inflation is unlikely to do much to alter the Reserve Bank of India’s interest rate hike plans. The central bank has already raised the repo rate by 140 basis points since the beginning of May and is widely expected to do so again next month as it faces the prospect of failing to meet its inflation mandate.
The Monetary Policy Committee is scheduled to next meet September 28-30.