Wholesale inflation cools to 4-mth low in Aug

India's wholesale inflation in August fell to a four-month low of 1.31%, driven by lower inflation in manufactured products and food items.

The Wholesale Price Index rose 2.04% in July.

Food price inflation was 3.11%, compared to 3.45% in July, showed data released by the commerce and industry ministry on Tuesday. On a sequential basis, the index declined 0.45% from July.

Fuel and power, core (non-food manufacturing), and crude petroleum and natural gas sub-groups together pulled down the headline WPI print by as much as 70 basis points in the month, said Rahul Agrawal, senior economist at ICRA. Inflation in manufactured products-the largest component of the index-rose 1.22%, compared to a rise of 1.58% in July. As per the data, out of the 22 sub-indices, moderation was visible in 13 categories of manufactured products.

Vegetable inflation fell 10.01% in August, after a fall of 8.93% in July. Inflation in fuel and power fell 0.67% in August, compared to a rise of 1.72% in July.

Lower prices of both onions and tomatoes has dragged down the vegetables inflation. Under foodgrains, prices of pulses and paddy eased further.

Data released last week showed India's retail inflation, measured by the Consumer Price Index (CPI), rising to 3.65% from 3.6% in July.

"The continued climb in non-perishable food prices bears watching. Lower manufactured costs owing to the fall in energy and metals prices reduces risks of spillover to core CPI," said Shreya Sodhani, regional economist, Barclays.

Bank of Baroda expects WPI to ease further in the coming months as softening of global commodity prices bodes well for this outlook. ICRA expects the WPI inflation to rise to around 2% in September from 1.3% in August 2024.