WPI-based inflation increases slightly to -0.52% in Aug vs -1.36% in July

India's wholesale inflation remained in the deflationary zone for the fifth month in a row in August, data released on September 14 by the commerce ministry showed, although the Wholesale Price Index (WPI) inflation rose to a five-month high of -0.52 percent. 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 negative rate of inflation in August this year is due to fall in prices of mineral oils, basic metals, chemical products, textiles and food products as compared to the corresponding month of previous year, according to the data by the Ministry of Commerce & Industry.

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.

According to the wholesale food inflation has also become close to 10 percent. Despite the decline in August, food products turnover among retail was 9.94 percent, while in wholesale turnover was 10.60 percent. However, due to fall in the prices of tomatoes and other vegetables, there has been a sharp decline of 3.65 percent compared to July but it still remains in double digits. Due to the sudden sharp increase in tomato prices, wholesale inflation had increased from 1.32 percent in June to 14.25 percent in July. In August 2022, the wholesale food inflation rate was 12.55 percent.

There has also been a decline in wholesale inflation of grains in August. It has come down to 7.25 percent in August as compared to 8.31 percent in July. In August 2022 it was 11.77 percent. However, in August the wholesale inflation rate of rice has increased to 9.18 per cent as compared to 9.03 per cent in July and that of pulses has increased to 10.45 per cent as compared to 9.59 per cent. The inflation rate of wheat has come down from 8.01 percent to 5.81 percent.

Wholesale inflation of vegetables declined from 62.12 percent in July but it still remains at a high level of 48.39 percent. The wholesale inflation rate of onion has increased three and a half times from 7.13 percent to 31.42 percent.

DPIIT releases the index number of wholesale prices in India every month on the 14th of every month (or the next working day). The Reserve Bank of India (RBI) has projected the CPI-based inflation at 5.4 per cent for 2023-24.