Wholesale price rise at 4-month low of 1.3% in August

Inflation in India’s wholesale prices slid to a four-month low of 1.31% in August from 2.04% in July, aided by a slight moderation in the pace of price rise in food items and manufactured goods, and fuel and power costs slipping into a mild deflation of 0.7% from a 1.7% uptick in the preceding month, government data released on Tuesday (September 17, 2024) showed.

Food inflation eased from 3.6% in July to 3.3% in August, but this was again spurred by a year-on-year decline in prices for vegetables and eggs, meat and fish, which dropped 10% and 0.7%, respectively.

Base effects played a key role in this moderation as vegetable prices were up 48.4% last August. Inflation in primary food articles stood at 3.1% from a steep 11.4% a year ago, but several items witnessed a sharp spurt in prices despite last year’s high base.

Cereals inflation remained firm at 8.44%, with paddy prices up 9.1% and wheat inflation accelerating to 7.3% from July’s 7% rate. Pulses inflation was a sharp 18.6, while potato inflation picked up further to 78% in August.

The price rise in onions stayed sharp at 65.75%, although below the 88.8% rise recorded in July. Inflation in fruits picked up to 16.7%, from 15.6% in July, while milk inflation offered some respite at 3.5%, compared with 8.5% a year ago.

The Food Index was down 1.13% from July levels, compared with the six-month high of a 2.7% sequential recorded in July.

Economists expect some of the gains in primary food articles inflation in August to reverse in line with base effects from last September, when they rose 3.8%, kicking in. “This would exert upward pressure to the headline wholesale inflation print for September 2024, which could rise to around 2% in from August’s 1.3% mark,” said Rahul Agrawal, senior economist at ICRA.

Manufactured products’ prices reversed a three-month rising streak with an inflation of 1.22% in August, from 1.6% in July. They were 0.07% lower on a month-on-month basis. 

Fuel and power prices rose 0.14% month-on-month, but were 0.7% below last August levels, which again marked a reversal of gradual upticks over the previous three months.