Wholesale inflation rises for 4th mth on higher food prices

New Delhi: Wholesale inflation in the country surged to a 16-month high of 3.36 per cent in June on account of rise in prices of food articles, especially vegetables and manufactured items. This was the fourth consecutive month when inflation witnessed an upward journey.

The wholesale price index (WPI) based inflation was 2.61 per cent in May. It was (-) 4.18 per cent in June 2023. Wholesale inflation had touched a high of 3.85 per cent in February 2023. “Positive rate of inflation in June, 2024 is primarily due to increase in prices of food articles, manufacture of food products, crude petroleum & natural gas, mineral oils, other manufacturing etc,” the Ministry of Commerce & Industry said in a statement on Monday.

As per the data, inflation in food articles rose 10.87 per cent in June, as against 9.82 per cent in May. Inflation in vegetables was 38.76 per cent during June, up from 32.42 per cent in May. Onion inflation was at 93.35 per cent, while potato was 66.37 per cent in the month under review. Pulses inflation rose 21.64 per cent in June. During the month, inflation in other food items like fruits stood at 10.14 per cent, cereals at 9.27 per cent, and milk at 3.37 per cent. The upmove in the WPI inflation in June 2024 was broad-based, driven by all the major segments except fuel and power, ICRA Chief Economist Aditi Nayar said.

Looking ahead, she said, the headline WPI inflation is expected to dip to about 2 per cent in July 2024, driven by a favourable base, as well as some cooling in global commodity prices. With regard to oil prices, she said, the average price of the Indian basket of crude oil has been quite volatile in July 2024 so far, on the back of supply-demand mismatches, witnessing a month-on-month rise ($86.6/bbl up to July 11).

Higher crude oil prices might exert an upward pressure to the headline WPI inflation in the ongoing month, she added. In the fuel and power basket, inflation stood at 1.03 per cent, marginally lower than 1.35 per cent in May. However, price rise in crude petroleum & Natural gas was in double digit at 12.55 per cent during the month. In manufactured products, inflation was at 1.43 per cent in June, higher than 0.78 per cent in May.

The rise in June WPI was in line with the retail inflation data for the month. Retail inflation rose to a four-month high of 5.1 per cent in June, data released last week showed. The Reserve Bank of India (RBI) mainly takes into account retail inflation while framing the monetary policy.