WPI inflation drops to 4-month low of 1.31% in August on lower prices

India’s wholesale price index (WPI)-based inflation cooled to a 4-month low of 1.31% in August, down from 2.04% in July, primarily due to reduced prices of manufactured products and food items. Data from the Commerce Ministry revealed that food price inflation stood at 3.11%, compared to 3.45% in July. Prices of major sub-indices, such as manufactured products, decelerated, and fuel and power prices contracted. Within food articles, prices of cereals (8.44%), paddy (9.12%), and pulses (18.57%) slowed, while onion prices, although high at 65.75%, showed some deceleration. In contrast, potato prices surged by 77.96%, and fruit prices increased by 16.7% in August.

Manufactured products, which carry a 64.2% weight in the index, saw inflation decline to 1.22% from 1.58% in July, driven by lower prices in manufactured food products (3.61%), beverages (1.9%), textiles (1.79%), wood products (3.17%), and pharmaceuticals (1.97%). Factory gate prices for fuel and power (-0.67%) also contracted, with high-speed diesel (-3.03%) and petrol (-4.23%) seeing further declines in August, though cooking gas prices surged by 14.4%. This data follows a slight rise in retail inflation to 3.65% in August from 3.6% in July. However, it remains below the Reserve Bank of India’s medium-term target of 4%. The reduction in WPI could help maintain low retail inflation, albeit with a time lag.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.