Wholesale Inflation Remains Negative For Fifth Month, Rises Slightly To -0.52% In August

"The negative rate of inflation in August 2023 is primarily due to fall in prices of mineral oils, basic metals, chemical & chemical products, textiles and food products,” the government said

India's wholesale price-based inflation has continued its negative trend for the fifth month in a row, with the Wholesale Price Index (WPI) standing at -0.52 per cent in August, according to data released by the Ministry of Commerce and Industry on Thursday. The WPI inflation rate has been consistently negative since April when it stood at -4.18 per cent and was -1.36 per cent in July. In August last year, the WPI inflation rate stood at 12.48 per cent.

"The negative rate of inflation in August 2023 is primarily due to fall in prices of mineral oils, basic metals, chemical & chemical products, textiles and food products as compared to the corresponding month of previous year,” the commerce and industry ministry said on Thursday.

The data revealed that inflation in food articles remained in double digits at 10.60 per cent in August, though it marked a decrease from the 14.25 per cent recorded in July. In terms of month-over-month changes, the WPI index for August 2023, increased by 0.33 per cent compared to July 2023.

Prices of crude petroleum and natural gas (5.25 per cent), minerals (3.56 per cen), and non-food articles (0.25 per cent) increased in August 2023, compared to July 2023. However, prices of food articles declined by (-1.52 per cent).

Fuel & Power group saw an increase of 2.96 per cent in August, 2023, primarily due to rising prices of mineral oils (4.02 per cent) and electricity (1.79 per cent). The manufactured products prices index rose slightly by 0.14 per cent in August, 2023. The food index saw a sharp fall to -0.85 per cent from 7.20 per cent in July. 

In August, the Consumer Price Index (CPI)-based inflation, often referred to as retail inflation, stood at 6.83 per cent. This marked a decrease from the high of 7.44 per cent recorded in July, according to data released by the National Statistical Office (NSO).

The Reserve Bank of India (RBI) opted to maintain the key interest rate at 6.5 per cent for the third consecutive meeting in August. However, the RBI indicated a willingness to implement tighter monetary policies should food prices push inflation to higher levels. The central bank relies on retail or consumer price index-based inflation as a crucial factor in shaping its monetary policy decisions.