Wholesale inflation cools in July

India’s wholesale price inflation eased for the second consecutive month in July to 11.16% from 12.07% a month ago but remained in double digits for the fourth month, led by manufactured items, data released by the government on Monday showed.

However, WPI rose 0.6% month-on-month. In July last year, WPI inflation was -0.25%.

“The high rate of inflation in July is primarily due to low base effect and rise in prices of crude petroleum and natural gas; mineral oils; manufactured products like basic metals; food products; textiles; chemicals and chemical products etc as compared to the corresponding month of the previous year,” commerce and industry ministry said in a statement.


Food inflation eased for the third straight month, falling to 0% in July, while fuel inflation declined to 26%. Manufactured products inflation rose to 11.2% in July from 10.88% in June, indicating that manufacturers regained pricing power as economic recovery gathered momentum amid reduced Covid-19 restrictions.

Of the 22 sub-groups for manufactured products, 13 groups witnessed increase in prices, economists said.

The increase in prices is mainly contributed by manufacture of tobacco products; fabricated metal products, except machinery and equipment; machinery and equipment; and printing and reproduction of recorded media and computer, electronic and optical products.

Data released last week showed retail inflation easing to 5.59% in July from 6.26% a month ago.

“The WPI inflation cooled for the second month in a row benefitting from a favourable base effect, a welcome softening of food price pressures and the uncertainty related to the Delta plus variant arresting the rise in commodity prices,” said Aditi Nayar, chief economist, ICRA.

Inflation in onions saw the sharpest rise at 72.01% from 64.32% in June while that in crude petroleum rose 65.51% compared with 62.6% in the previous month.
With global commodity prices plateauing, WPI inflation is likely to continue to slow gradually.

“We expect the core WPI inflation to have peaked at 10.8% in July,” Nayar said, adding that the rapid rise in the core WPI inflation from August onwards as well as the impact of concerns related to the Delta plus variant on commodity prices are likely to gradually soften the core prints.

“Inflation is likely to hover in double digits again in August, although favourable base effects could lead to faster deceleration in subsequent months. We expect policymakers to remain wary of elevated price levels,” said Rahul Bajoria, chief India economist, Barclays.