Wholesale inflation contracts 0.52% in Aug

Price Pressure

♦ Prices of veggies, onion, pulses remain firm

♦ CPI inflation to be in 5.5-6.5% range in next 2 qtrs

♦ Experts opine that RBI MPC will have limited option

New Delhi: Wholesale price inflation remained in negative territory for the fifth straight month in August at (-) 0.52 per cent, though it rose sequentially from the previous month on account of firm prices of food items, especially vegetables, onion and pulses. The wholesale price index (WPI) based inflation rate has been in the negative since April and was (-)1.36 per cent in July. In August last year, WPI inflation was 12.48 per cent.

According to economists, fading base effects and elevated food inflation led to a (-)0.52 per cent WPI in August, which came in higher than July numbers. Inflation in food articles remained in double digit for the second straight month at 10.60 per cent in August, lower than 14.25 per cent in July.

Wholesale inflation in vegetables was 48.69 per cent in August, against 62.12 per cent in July. In pulses, inflation was 10.45 per cent, while in onion it skyrocketed to 31.42 per cent in August. “Within food, prices of vegetables, which surged in July, moderated sequentially in August, but year-on-year, inflation remains high.

Additionally, a small sequential increase in prices of manufactured products (which have the largest weight in WPI) also contributed to the slower headline deflation,” said Barclays MD & Head of EM Asia Economics Rahul Bajoria. Fuel and power basket inflation was at (-)6.03 per cent in August, against (-) 12.79 per cent in July. In manufactured products, inflation rate was (-)2.37 per cent, as against (-)2.51 per cent in July. “The negative rate of inflation in August 2023 is primarily due to fall in prices of mineral oils, basic metals, chemical & chemical products, textiles and food products as compared to the corresponding month of previous year,” the commerce and industry ministry said on Thursday.