July WPI inflation eases to 13.93% from 15.18% in June

India’s July wholesale price inflation slipped to a five-month low of 13.93% backed by lower prices of food and manufactured items. But fuel and power inflation surged to nearly 44% in July from 40% in June.

The WPI has continued to be in double digits since April 2021.

The rate of price rise in food articles in July came down to 10.77% from 14.39% in June. For vegetables, it declined substantially to a little over 18% in July from nearly 57% in June.

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Analysts said that the fall in WPI would have been sharper if the rise in electricity tariff was not sharp.

“The fall in WPI inflation for the second consecutive month comes as a big relief. The easing of WPI in July is primarily led by lower food, metals and chemical prices. If not for a sharp sequential rise in mineral prices and a hike in electricity tariff, the fall in WPI would have been sharper. Going ahead, the signs of global supply chain normalisation coupled with recession fears in major economies should support the downtrend in commodity prices,” said Rajani Sinha, Chief Economist at CareEdge.

Consequently, wholesale price inflation is expected to ease further in the coming months, Sinha added.

Sinha, however, said that lower sowing of paddy and a tight supply of wheat could limit the fall in primary inflation. Further, a weaker rupee, to some extent, mitigates the benefit of a decline in commodity prices.

The data came days after retail inflation numbers, which came down in July but still remained much above the Reserve Bank of India’s upper tolerance band of 6%. The RBI mainly looks at retail inflation for its monetary policy decision.