WPI inflation eases to 13.93 percent in July

The wholesale-based (WPI) inflation moderated to 13.93 percent in July as against 15.18 percent in June.

The number has remained in double digits for the 16th consecutive month.

“Inflation in July, 2022 is primarily contributed by rise in prices of mineral oils, food articles, crude petroleum & natural gas, basic metals, electricity, chemicals & chemical products, food products etc. as compared to the corresponding month of the previous year,” stated the press release.


The significant decline in WPI number can be attributed to lower food, metals and chemical prices.

Inflation in food articles basket in July came in at 10.77 percent, meanwhile, the inflation in the manufacturing goods segment declined by 0.42 percent to 8.16 percent.

Primary Articles, which is a key segment, witnessed a decline of 2.69 percent to 15.04 percent in July.
For the fuel and power segment, the WPI number jumped to 43.75 percent in July, from 40.38 percent in June.

"The fall in WPI inflation for the second consecutive month comes as a big relief. The easing of WPI inflation in July is primarily led by lower food, metals and chemical prices. If not for a sharp sequential rise in mineral oil prices and hike in electricity tariff, the fall in WPI inflation would have been sharper," said Rajani Sinha, Chief Economist at CareEdge.

According to the economist, the signs of global supply chain normalisation coupled with recession fears in major economies should support the downtrend in commodities prices. Consequently, wholesale price inflation is expected to ease further in coming months.

"However, lower sowing of paddy and tight supply of wheat could limit the fall in primary inflation. Further, a weaker rupee would to some extend mitigate the benefit of decline in commodity prices," she added.

The number comes a few days after the government published the CPI inflation which cooled off significantly to 6.71 percent owing to easing food and oil prices.

The Reserve Bank of India (RBI), during the MPC meeting this month, hiked the repo rate by 50bps while it left its inflation forecast for the country unchanged at 6.7% for this fiscal year. The print is only expected to move within the comfort band in the fourth quarter, as price pressures in Asia's third largest economy remain contingent upon the evolving geopolitical developments.

RBI governor Shaktikanta Das said that inflation is expected to remain above the central bank's 6% threshold in the second and third quarters of this fiscal year, for which the MPC stressed that sustained high inflation could destabilise inflation expectations and harm growth in the medium term.