India’s WPI Inflation Eases After Six Months

India’s wholesale inflation eased a bit after six months, led by a decline in prices of fuel, power and primary articles.

Inflation as measured by the Wholesale Price Index stood at 12.07% in June compared with 12.94% in May 2021, according to data released by the Ministry of Commerce and Industry. Month-on-month, however, the gauge rose 0.75% against an increase of 0.53% in May.

A Bloomberg poll of 23 economists had pegged the wholesale inflation at 12.18%.

Although it remained elevated, the WPI inflation moderated from last month’s peak, with a normalising base contributing to a sharp correction in the inflation for minerals, crude oil and natural gas, despite a rise in global commodity prices, said Aditi Nayar, chief economist at ICRA Ltd.

While the core inflation hardened further to 10.4% in June 2021 from 10.0% in May, the pace of the month-on-month uptick in this index [WPI] eased to a four-month low of 0.5%, Nayar said, It is expected to record a further modest uptick in July, before commencing a gradual downtrend thereon, she said.

Inflation Internals

• Inflation in manufactured products, the largest component of the index, was at 10.88% in June compared with 10.83% in May. Month-on-month, it rose 0.38%.

• Year-on-year, primary articles inflation stood at 7.74% in June compared with 9.61% in May. Over the preceding month, it rose 0.86%.

• Prices of food articles rose 3.09% annually against 4.31% in May. Month-on-month, the index rose 0.31%.

• The index of non-food articles rose 18.86% over the year earlier against an increase of 18.37% in May. It rose 2.55% over the preceding month.

• Fuel and power index rose 32.83% annually in June against 37.61% in May. Month-on-month, it rose 2.9%.

In primary articles, prices of onions saw the sharpest rise. Prices of onions rose 64.32% after an increase of 23.24% in the previous month. Prices of crude petroleum also rose 62.6% after a jump of 102.51% in May.