Lower food prices cool India's July wholesale inflation to 5.09% (Roundup)

Lower prices of food items and primary goods decelerated rise in India's annual inflation rate based on wholesale prices to 5.09 per cent in July from 5.77 per cent in June, official data showed on Tuesday, a day after retail inflation for July too softened to 4.17 per cent.

The data on the Wholesale Price Index (WPI) furnished by the Commerce Ministry showed that the rate of inflation had increased to 1.88 per cent during the corresponding month in 2017.

"Build-up inflation rate in the financial year so far was 2.92 per cent compared with 0.62 per cent in the corresponding period of the previous year," the Ministry said in a statement here.

On a sequential basis, the expenses on primary articles, which constitute 22.62 per cent of the WPI's total weightage, inched up by 1.73 per cent, from an increase of 5.30 per cent in June 2018.

Similarly, the prices of food articles dipped. The category has a weightage of 15.26 per cent in the WPI index. It deflated by (-) 2.16 per cent from a rise of 1.80 per cent.

However, the cost of fuel and power category, which commands a 13.15 per cent weightage, increased at a faster pace of 18.10 per cent from a growth of 16.18 per cent.

In addition, expenses on manufactured products registered a rise of 4.26 per cent from 4.17 per cent.

On a year-on-year (YoY) basis, onion prices soared higher by 38.82 per cent and for potatoes by 74.28 per cent.

In contrast, the overall vegetable prices in July declined by 14.07 per cent, against a rise of 22.01 per cent in the same month a year ago.

Further, the data revealed that wheat became dearer by 6.31 per cent on a YoY basis while prices of pulses came down by 17.03 per cent, though paddy became expensive by 3.96 per cent.

The prices of protein-based food items such as eggs, meat and fish went up marginally by 0.87 per cent.

Fuel-wise, the price of high-speed diesel rose by 22.84 per cent on a YoY basis, petrol by 20.75 per cent and LPG by 31.68 per cent.

Lower food prices eased India's July retail inflation to 4.17 per cent from 4.92 per cent in June even as it continued to rule over the Reserve Bank of India (RBI)'s medium-term inflation target of 4 per cent, official data showed.

Continuing with the reversal of accommodation begun in June, the RBI earlier this month again hiked its key lending rate by 25 basis points to bring its repo rate to 6.50 per cent citing upside risks to inflation.

Commenting on the wholesale price numbers, the Confederation of Indian Industry welcomed it as "very good news".

"Having benefited from the decline in primary articles, particularly food prices, hopefully, this is the beginning of a downswing in prices. The moderation in both CPI (consumer price index) and WPI inflation should induce the RBI to resume the benign interest rate regime," CII Director General Chandrajit Banerjee said in a statement.

--IANS

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