Wholesale Price Inflation Doubles In June On Higher Potato, Pulses Prices

A sharp rise in prices of vegetables, pulses and sugar pushed up wholesale inflation to 1.62 per cent in June versus 0.79 per cent increase in the previous month. The faster-than-expected rise in wholesale food prices will also impact retail inflation, which is used by the Reserve Bank to set interest rates.

Among food items, vegetable prices rose 17 per cent year-on-year, driven by a sharp 64 per cent jump in potato prices.

Prices of pulses, which are near record highs, rose by 27 per cent year-on-year in June. India, the world's biggest consumer of pulses, produced 17 million tonnes in 2015-16, while imports were 5.79 million tonnes.

Earlier this month, the government said that it will import pulses from Mozambique to control rising prices.

Similarly, sugar prices jumped 26 per cent in June on the back of rising global prices, which are near four-year highs. Last month, the government had imposed a 20 per cent customs duty on sugar exports to boost domestic supply and check price rise.

Overall, wholesale food prices rose 8.18 per cent year-on-year in June, compared with a provisional 7.88 per cent gain in May.

In the past, the seasonal spurt in prices of onions, which are also a staple of Indian diet, has been blamed in the past for the jump in food inflation. But this year, the price of onions has remained stable on the back of bumper production. In fact, in June, onion prices fell 29 prices from previous year's level, wholesale inflation data showed. 

Earlier this week, retail inflation hit its highest level in nearly two years in June, increasing the odds of the central bank keeping interest rates on hold next month.

Consumer prices rose 5.77 per cent on an annual basis last month - the fastest pace since August 2014. Retail food inflation accelerated to 7.79 per cent in June from 7.47 per cent a month ago on the back of double-digit annual increases in prices of sugar, pulses and vegetables.