WPI inflation eases to a four-month low of 1.3% in Aug as fuel prices soften – Times of India

NEW DELHI: Wholesale price inflation eased to a four-month low in Aug compared to the previous month largely led by a moderation in prices of fuel and power, manufactured products and some vegetables.
Data released by the commerce and industry ministry on Tuesday showed inflation, as measured by the wholesale price index (WPI), rose 1.3% in Aug, slower than the 2% in July.In Aug last year the WPI rate was in the negative zone at (-) 0.5%.
The ministry said the positive rate of inflation in August, 2024 was primarily due to increasing prices of food articles, processed food products, other manufacturing, manufacture of textiles and manufacture of machinery and equipment.
Core inflation which is minus food and fuel slowed 0.7% in Aug from 1.2% led by moderation in global commodity prices.
WPI food inflation slowed marginally to a 10-month low of 3.3% in Aug compared to 3.6% in July. But some price pressures of potato, onion, fruits and pulses remained stubborn. Potato inflation was up nearly 78% in Aug compared to 76.2% in July. Onion prices rose an annual 65.6% in Aug, lower than the 88.8% in July.
Latest data had shown that retail inflation inched up marginally in Aug led by vegetable and some food prices and remained below the Reserve Bank of India’s 4% target for the second time in a row providing room to the central bank to move on interest rates later this year depending on the geopolitical situation. RBI largely uses the retail inflation data while setting interest rates.
Experts said cooling fuel prices and overall moderation in global commodity prices should help contain wholesale price inflation in Sept.
“Global commodity prices have remained benign through Sept 2024 so far, which is likely to contain the sequential momentum in the non-food WPI,” said Rahul Agrawal, senior economist at ratings agency ICRA.
“The price of the Indian basket of crude oil has averaged 6.0% lower in Sept 2024 on a sequential basis, while touching the lowest levels in 33 months, which would also help contain the uptick in the headline WPI inflation print in the month. Overall, we expect the WPI inflation to rise to 2.0% in Sept from 1.3% in Aug 2024,” said Agrawal.