Wholesale price-based inflation eases to 11-month low of 12.41% in August

Softening in prices of manufactured and fuel products drives down WPI inflation even as food items remain expensive

wheat transportation fraud, Punjab, vigilance department unearths wheat transportation fraud
Wheat prices continue to be elevated after intense heat waves impacted summer crops.

Wholesale price-based (WPI) inflation eased to 11-month low of 12.41 per cent in August, on softening in prices of manufactured and fuel products, even as food items remained expensive.

Although WPI-based inflation declined for three consecutive months in August, it remained in double digit for 17 months beginning April last year. The inflation was 13.93 per cent in July and 11.64 per cent in August last year.

While the headline WPI eased in August, food inflation remained a concern. There has been a pick-up in prices of vegetables, fruits, eggs, meat and fish and cereals mostly because of erratic monsoon rains. Wheat prices continue to be elevated after intense heat waves impacted summer crops.

Also read: Retail inflation inches up to 7% in August on costlier food items


The decline in the headline WPI inflation in the month was largely due to a fall in fuel and power inflation. 

In September last year, WPI inflation at 11.8 per cent was lower than August 2022. Inflation in food articles in August rose to 12.37 per cent, as against 10.77 per cent in July, on account of costlier cereals, fruits and vegetables.

The rate of price rise in vegetables was 22.29 per cent during the month under review, while in the case of potato it was 43.56 per cent. Inflation in cereals was 1.77 per cent, while in wheat and fruits it was 17.35 per cent and 31.75 per cent, respectively.

Fuel, power basket

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 oilseeds, it was 7.51 per cent and (-) 13.48 per cent, respectively.

The Reserve Bank of India mainly looks at retail inflation to frame its monetary policy.

Retail inflation has remained above the Reserve Bank’s upper tolerance threshold of 6 per cent for eighth month in a row and was at 7 per cent in August.

To tame stubbornly high inflation, the RBI has hiked the key interest rate three times this year to 5.40 per cent. According to the central bank’s projections, retail inflation is likely to average 6.7 per cent in 2022-23.

Domestic rating agency Icra said WPI inflation is likely to ease to 11-12 per cent in September 2022 and print in single digit thereafter.

“The downside surprise was led by a lower-than-anticipated rise in fuel and global commodity prices,” Morgan Stanley said in a note. 

With agency inputs