-Imports expanded by 57.55% to $66.31 bn in June compared to the year-ago month, showed govt data
-June WPI inflation of 15.18 per cent comes on the back of a high base of 12.07 per cent for the same month in 2021
New Delhi, NFAPost: India’s merchandise exports in June grew by 23.52 per cent to $40.13 billion, while the trade deficit ballooned to a record of USD 26.18 billion, according to a government data release.
Imports expanded by 57.55 per cent to $66.31 billion in June compared to the year-ago month, the data showed.
The trade deficit stood at $9.60 billion in June 2021.
Cumulative exports in April-June 2022-23 rose by about 24.51 per cent to $118.96 billion, while imports increased 49.47 per cent to $189.76 billion during the period.
The trade deficit during the first three months of this fiscal widened to USD 70.80 billion from USD 31.42 billion in the year-ago period.
WPI-based inflation cools to 15.18% in June from May’s high
Wholesale Price Index-based inflation (WPI) for June decreased slightly from a four-decade high in May. Still, it remained at 15.18%, primarily driven by international crude prices, food articles, mineral oils, and others. This was the third consecutive month that factory-gate inflation was above the 15% mark.
WPI inflation in May had come in at 15.88%, a record for the current series and the highest since September 1991.
For June, the WPI for food index, which constitutes 24.4% of the total index, came in at 12.41 per cent compared with 10.89% in May. Inflation in fuel and power, which reflects global crude and gas prices, came in at 40.38%, nearly identical to that of the month before.
Manufactured products, which have a weightage of 64.2%, registered inflation of 9.19%, down from 10.11% in May, while inflation in primary articles held steady at 19.22%.
What remains worrying is that June WPI inflation of 15.18% comes on the back of a high base of 12.07% for the same month in 2021.
“The high rate of inflation in June 2022 is primarily due to rise in prices of mineral oils, food articles, crude petroleum, natural gas, basic metals, chemicals & chemical products, food products etc.,” the ministry of commerce, which releases WPI data, said in a statement.
“Providing welcome relief, the core index declined by 0.7% in month-on-month terms after 24 consecutive months of rises, dampening the year-on-year core inflation to single digits of 9.3% in June after a gap of 13 months,” said Aditi Nayar, Chief Economist with ICRA Ltd.
“WPI inflation moderated in June but remains at an elevated level. Easing in global commodity prices and the Indian government’s supply-side measures could aid in taming price pressures in the coming months,” said Rahul Bajoria, Chief India Economist with Barclays.
Among the sub-groups, WPI inflation for LPG, petrol and diesel rose by 53.2%, 57.8%, and 54.9%, respectively, as global crude prices stayed above the $100 mark in June.
WPI inflation in vegetables
WPI inflation in vegetables rose 56.7%. However, onion wholesale prices decreased sharply, down 31.54%. Commodities saw a spike in wholesale prices, with basic metals rising 12.09% and semi-finished steel rising 10.7%.
Looking ahead, a round of expected monetary tightening by the United States Federal Reserve and fears of a global slowdown are expected to drive down commodity prices, thus reducing wholesale inflation pressures.
“While the easing of many of the global commodity prices is a comforting factor, volatile crude oil prices and the weakening of rupee against dollar continue to pose an upside risk to the wholesale inflation number. Food inflation will continue to inch higher due to accelerating vegetable prices. Consequently, we expect WPI to remain in double-digits till the second quarter of this fiscal,” said Rajani Sinha, Chief Economist with Care Ratings.
“We expect the WPI inflation to ease to around 13% in July 2022, reflecting the ongoing correction in global commodity and fuel prices as well as domestic food prices,” said Nayar.
Though the Reserve Bank of India’s monetary policy committee is tasked with containing Consumer Price Index-based inflation and not wholesale inflation, the latter seeps into the former. Hence, WPI food inflation remains a matter of concern. Economists expect the MPC to go for two more rounds of rate hikes.
Agencies
