WPI inflation in negative zone

NEW DELHI - India's annual inflation rate based on the Wholesale Price Index rose to (-)0.58% in July from (-)1.81% the previous month on higher vegetable and fuel prices, data released today by the commerce and industry ministry showed. Wholesale price inflation was 1.17% in July last year.

The WPI inflation print for July is in line with the consensus estimate. According to the median of a Cogencis poll, wholesale inflation for July was seen at (-)0.6%.

This is fourth consecutive month in which wholesale prices have contracted on a year-on-year basis, with the nationwide lockdown to curb the spread of COVID-19 sending WPI inflation into the negative zone in April after almost four years.

Wholesale inflation rose in July primarily due to food prices, with the food articles index increasing 3.4% month-on-month on account of a massive 25.2% rise in the vegetable index. As a result, food inflation rose to 4.32% from 3.05% the previous month.

Further upward pressure came from fuel and power index, which increased 2.7% from June.

The index for manufactured products, which account for nearly two-thirds of the weight of the WPI, was unchanged from June, indicating that demand remains weak even after the easing of lockdown restrictions.

Manufactured products inflation edged up to 0.51% from 0.08% in June.

Core WPI inflation--an indicator of underlying demand conditions-remained in the negative zone, coming in at (-)0.3% in July as against (-)0.9% in June.

The rise in WPI inflation follows that of Consumer Price Index inflation.