August is the 17th consecutive month of double-digit wholesale price inflation (WPI)
Mumbai, NFAPost: The wholesale price-based inflation eased to 11-month low of 12.41% in August, on softening in prices of manufactured and fuel products, even as food items remained expensive.
Although the Wholesale Price Index (WPI) based inflation declined for three consecutive months, it remained in double digit for 17th months beginning April last year.
The inflation was 13.93% in July and 11.64% in August last year. It had touched a record high of 15.88% in May this year. The inflation was lower than August print in September last year when it was 11.8%.
Inflation in food articles in August rose to 12.37%, as against 10.77% in July, on account of costlier cereals, fruits and vegetables.
The rate of price rise in vegetables was 22.29% during the month under review, while in case of potato it was 43.56%.
Inflation in cereals was 1.77%, while in wheat and fruits it was 17.35% and 31.75% respectively. In the fuel and power basket, inflation was 33.67 per cent in August, as against 43.75% in July. In manufactured products and oil seeds, it was 7.51% and (-) 13.48%, respectively.
The Reserve Bank of India (RBI) mainly looks at retail inflation to frame its monetary policy. Retail inflation has remained above the Reserve Bank’s upper tolerance threshold of 6% for the eighth month in a row and was at 7% in August.
To tame stubbornly high inflation, the RBI has hiked the key interest rate three times this year to 5.40%.
According to the central bank’s projections, retail inflation is likely to average 6.7% in 2022-23. Domestic rating agency Icra said WPI inflation likely to ease to 11-12% in September 2022 and print in single digits thereafter.
“The downside surprise was led by a lower-than-anticipated rise in fuel and global commodity prices,” Morgan Stanley said in a note.
