Wholesale inflation picks up in July, rises 1.88%
FOOD FOR THOUGHT After falling in June, vegetable prices gain 21.95% in July
India’s wholesale price inflation rate picked up in July after easing for four straight months, with food prices back on the rise. The wholesale price index rose 1.88% in July from a year earlier, compared with an increase of 0.63% in July 2016, government data showed on Monday.
The rise compares with a 1.3% increase forecast by economists in a Reuters poll and a provisional 0.9% rise in June - the slowest pace since July 2016.
Wholesale food prices in July rose 2.15% on year, compared with a 3.47% fall a month earlier.
Vegetable prices, which had witnessed a 21.16% contraction in June, shot up by 21.95% in July. However, manufactured products saw a slight fall in inflation at 2.18% in July, compared to 2.27% in June.
In fuel and power segment, inflation witnessed a decline at 4.37% in July, over 5.28% in the previous month.
Apart from vegetables, the food articles which saw rise in prices include egg, meat and fish where inflation stood at 3.30%. Fruits saw inflation at 2.71%, cereals (0.63%) and paddy (3.47%).
However, potato continued to see deflation at 42.45%, pulses (-)32.56% and onion (-)9.50%.
The final print of May WPI inflation witnessed a marginal surge at 2.26%, compared to provisional estimates of 2.17%.
“The turnaround in inflation for primary food items and minerals, the former on account of the spike in vegetable prices and the latter led by an unfavorable base effect, caused the WPI inflation to more-than-double to 1.9% in July 2017 from 0.9% in June 2017,” said Aditi Nayar, principal economist at ICRA Ltd.
The goods and services tax (GST), implemented on July 1, combined a welter of central and state levies into a four-tier tax structure of 5, 12, 18 and 28% for all goods and services.
Data released last week showed that industrial output hit a four-year low and contracted 0.1% in June, mainly due to a decline in manufacturing and capital goods sectors.
Easing price pressures gave the Reserve Bank of India (RBI) room to cut its main policy rate by 25 basis points to 6% earlier this month, the lowest since November 2010. It was the first rate cut by an Asian central bank this year.
But the RBI retained its “neutral stance” and warned inflation could pick up again.
REUTERS AND PTI (WITH MINT INPUTS)