New Delhi: In line with the moderation in retail inflation, wholesale inflation in India too witnessed a sharp decline in July.
The annual rate of inflation based on all India Wholesale Price Index (WPI) number is 2.04 per cent (provisional) for the month of July, 2024 (over July 2023).
It continues to remain in the positive territory for the ninth month after remaining in the negative zone for seven months until October. Economists often say a little rise in wholesale inflation is good as it typically incentivizes goods manufacturers to produce more.
For food index, which has 24.38 per cent weightage, the rate of wholesale inflation decreased from 8.68 per cent in June, 2024 to 3.55 per cent in July.
The increase last month was largely due to higher prices in various categories including food articles, manufacture of food products, crude petroleum and natural gas, mineral oils, and other manufacturing sectors.
The government releases index numbers of wholesale prices on a monthly basis on the 14th of every month (or the next working day). The index numbers are compiled with data received from institutional sources and selected manufacturing units across the country.
In April last year, the wholesale inflation went into negative territory. Similarly, in the initial days of COVID-19, in July 2020, the WPI was reported negative.
Overall wholesale inflation was 8.39 per cent in October 2022 and has fallen since then. Notably, the wholesale price index (WPI)–based inflation had been in double digits for 18 months in a row till September 2022.
Meanwhile, India’s retail inflation, after breaching 5 per cent in June, softened drastically in July. According to data released by the Ministry of Statistics and Programme Implementation, retail inflation or Consumer Price Index in July was at 3.54 per cent, which is the lowest in the last 59 months.
In June, taking a departure from the moderation it witnessed in the past months, it rose to 5.08 per cent, pushed by rising food prices.
Food inflation for July 2024 is the lowest since June 2023. Year-on-year inflation rate based on All India Consumer Food Price Index (CFPI) number is 5.42 per cent (Provisional) for the month of July, 2024. The corresponding inflation rate for rural and urban is 5.89 per cent and 4.63 per cent, respectively.
Rising food prices continued to be a headache for Indian consumers with the inflation rate in the food segment almost doubling year-on-year in June.
Food prices continue to remain a pain point for the policymakers in India, who wish to bring retail inflation to 4 per cent on a sustainable basis. However the latest retail inflation data showed the overall inflation has aligned with the intended target.
Inflation has been a concern for many countries, including advanced economies, but India has largely managed to steer its inflation trajectory quite well. The eased month-on-month retail inflation, barring June, came on the heels of RBI having maintained the status quo in the repo rate for the ninth straight occasion.
Barring the recent pauses, the RBI has raised the repo rate by 250 basis points cumulatively since May 2022 in the fight against inflation. Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline. The repo rate is the rate of interest at which the RBI lends to other banks.
(With inputs from ANI)
