India’s July WPI inflation records second straight fall to 11.16%
New Delhi: As per the WPI data released by the government, India’s wholesale price inflation or WPI eases 0.25% on year in July due to a low rise in food and fuel prices
India’s wholesale price inflation or WPI eases 0.25% to 11.16% on year in July due to a low rise in food and fuel prices even as prices of manufactured goods moved up, according to the government data released today.
It is the second straight fall in WPI after reaching the peak in May with 13.11%. In June, the WPI percentage clocked at 12.11%.
“The high rate of inflation in July 2021 is primarily due to low base effect and rise in prices of crude petroleum & natural gas; mineral oils; manufactured products like basic metals; food products; textiles; chemicals and chemical products, etc as compared the corresponding month of the previous year,” the government data read.
The retail inflation had also eased to 5.59% in July month-on-month.
The WPI inflation cooled for the second month in a row, benefitting from a favorable base effect, a softening of food price pressures, and the uncertainty related to the Delta plus variant arresting the rise in commodity prices, Aditi Nayar, chief economist at ICRA said to Bloomberg Quint.
Other WPI Indexes
The largest component of the index, manufactured goods rose 11.20% compared with a 10.88% rise in June. The 0.38% rise in the index of the major group is attributed to the increase in prices in the manufacture of tobacco products; fabricated metal products, except machinery and equipment; machinery and equipment; printing and reproduction of recorded media and computer, electronic and optical products.
The primary articles inflation stood at 5.72 in July compared with 7.74% in June. Food articles inflation remained unchanged compared to a 3.09% annual rise in June. Non-food articles inflation rose 22.94% over the year in July against 18.86 in June.
Notably, the price of onions surged 72.01% in July compared to the June rise of 64.32%. It was the highest jump in the food articles inflation category. Crude petrol prices also jumped to a little over 65% in July, compared to June’s 62.6%.
RBI’s Monetary Policy focus on growth than inflation concerns
Earlier this month, The Reserve Bank Of India kept the interest rates on hold to aid economy revival from the pandemic blows. RBI held the interest rates for the seventh straight time even as monetary policy committee (MPC) members split amid the rising inflation concerns. The committee kept the repo rate or the rate at which bank borrows from the RBI unchanged at 4%. The reverse repo rate stands at 3.35%.
Governor Das has also noted the uneven recovery of the economy with the phase-wise reopening of the lockdown 2.0. RBI Governor Shaktikanta Das said in a video conference, “The MPC continues to be conscious of its mandate of anchoring inflation expectations as soon as the prospects for strong and sustainable growth are assured.” The decision was based on two main factors. The aggregate demand continues to be weak and the supply remains below pre-pandemic levels. “A pre-emptive monetary policy response at this stage may kill the nascent and hesitant recovery that is trying to secure a foothold in extremely difficult conditions,” Das added.
The MPC members voted 5-1 in favor of RBI’s accommodative policy stance continuation, as long as necessary to sustain growth on a durable basis. According to the Mint report, MPC member Jayant Varma was the only one to express reservations about the policy stance.