Wholesale Inflation Eases To 12.41 Per Cent In August On Softening In Prices Of Manufactured Goods

According to the report, August is the 17th consecutive month of double-digit wholesale price inflation. In May this year, the WPI had touched a record high of 15.88 per cent

The wholesale price-based (WPI) inflation eased for the third consecutive month in August to 12.41 per cent because of softening in prices of manufactured items, despite food items saw an uptick, according to the data published by the Ministry of Commerce & Industry on Wednesday.

The WPI-based inflation was 13.93 per cent in July and 11.64 per cent in August last year. According to the report, August is the 17th consecutive month of double-digit wholesale price inflation (WPI). In May this year, the WPI had touched a record high of 15.88 per cent.

Inflation in food articles in August rose to 12.37 per cent, as against 10.77 per cent in July. The rate of price rise in vegetables was 22.29 per cent during the month under review, as against 18.25 per cent in July.

In the fuel and power basket, inflation was 33.67 per cent in August, as against 43.75 per cent in July. In manufactured products and oil seeds it was 7.51 per cent and (-) 13.48 per cent, respectively.

The government on Monday released retail inflation data which snapped a three-month downward trend in August by inching marginally to 7 per cent, mainly because of higher food prices.

This is above the Reserve Bank of India's (RBI's) comfort level of 6 per cent for the eighth month in a row. Inflation in food basket was 7.62 per cent in August, up from 6.69 per cent in July and 3.11 per cent in August 2021. This may add pressure on the RBI to hike interest rates more aggressively in coming months.

CPI inflation has now spent 35 consecutive months above the Reserve Bank of India's (RBI) medium-term target of 4 per cent and eight straight months outside the central bank's 2-6 per cent tolerance band. This macroeconomic data is important for policymakers as it showcases the current state of manufacturing, mining and other important sectors.

The central bank primarily looks at retail inflation to frame its monetary policy. To contain stubbornly high inflation, the RBI has hiked the key interest rate three times this year to 5.40 per cent.

According to the RBI’s projections retail inflation is likely to average 6.7 per cent in 2022-23.