India's wholesale price index (WPI)-based inflation rose to (-) 0.52 per cent in August as compared to (-) 1.36 per cent in July, according to the data released by the Office of the Economic Advisor on Thursday. WPI-based inflation, however, is significantly lower than the 12.48 per cent recorded in August 2022.
The WPI-based inflation is in the negative territory for the fifth month in a row.
The month-on-month change in inflation in all commodities was 0.33 per cent as compared to 2.01 per cent in July. In the primary articles category, it is (-) 0.43 per cent, down from 8.18 per cent in July.
In the fuel and power category, the MoM change is 2.96 per cent, higher than (-) 0.62 per cent in July. The wholesale inflation in manufactured products rose to (-) 2.37 per cent in August as compared to (-) 2.51 in July.
The food index saw a sharp fall to (-) 0.85 per cent from 7.20 per cent in July.
Earlier, the consumer price index (CPI)-based inflation, commonly called retail inflation, for the month of August came at 6.83 per cent as against a high of 7.44 per cent in July, according to the data released by the National Statistical Office (NSO).
It was at 7 per cent in August 2022. Food inflation fell to 9.94 per cent in August against 11.51 per cent in July. Rural inflation was on the higher side at 7.02 per cent, compared to urban inflation at 6.59 per cent in August.
The Reserve Bank of India (RBI) has projected the CPI-based inflation at 5.4 per cent for 2023-24.
"WPI contracted for the fifth straight month in August due to deflation in fuel and power and manufactured products categories whereas WPI food inflation remained in double digits. Sub-categories such as mineral oils, textiles, chemicals and metals remained in contractionary zone on an annual basis. However, some pressure was visible in fuel and power category with a sharp sequential rise in mineral oils and electricity prices," said Rajani Sinha, chief economist at CareEdge Ratings.
"With the support of high base fading, some uptick in WPI inflation could be seen in the second half. We could expect WPI inflation to enter the positive territory next month onwards. Additionally, rise in global crude oil prices and deficient rainfall domestically pose an upside threat."
Sinha further said that in FY24 WPI inflation is expected to average in the range of 1-2 per cent.
General and food inflation (% Y-o-Y)
Note: Data for July and Aug 2023 provisional
Source: Ministry of Commerce