The wholesale price inflation dipped to a three-month low, at 15.18 percent in June, up from 12.07 percent in the corresponding month a year ago. The ease in inflation last month was due to a relaxation in the prices of minerals, but food articles continued to weigh on the corporations’ or organizations’ pockets.
“This is marginally lower than the WPI number of 15.88% in May 2022, The high rate of inflation in June 2022 is primarily due to the rise in prices of mineral oils, food articles, crude petroleum & natural gas, basic metals, chemicals & chemical products, food products, etc. as compared to the corresponding month of the previous year,” read the statement released by the government.
It is for 1.3 years that the Wholesale Price Index (WPI) based inflation was registered in double-digit. In May, Wholesale Inflation notched a record 15.88 percent.
Inflation in food articles in June was 14.39 percent, as prices of vegetables, fruits, and potatoes increased significantly year on year.
In May, the wholesale price inflation in food articles was 12.34 percent.
Vegetable prices grew 56.75 percent, while potatoes and fruits got 39.38 and 20.33 percent, each costlier. Prices of cereals rose to 7.99% in June this year, whereas milk prices saw an upward momentum at 6.35% YoY.
The WPI inflation in minerals came down to 8.55 percent in June from 33.94 percent in May.
In the fuel and power basket, the prices rose 40.38 percent, driven by a rise in LPG prices, which saw an uptick of 21.76 percent to 53.20% from 31.44 percent last year.
Manufactured products and oil seeds prices rose by 9.19 percent and 2.74 percent, respectively. Inflation in crude petroleum and natural gas stood at 77.29 percent in June.
Icra Chief Economist Aditi Nayar said minerals and basic metals showed a steep month-on-month correction in June 2022, as fears of an impending global recession unfolded, dampening commodity prices.
“We expect the WPI inflation to ease to 13 percent in July 2022, reflecting the ongoing correction in global commodity and fuel prices as well as domestic food prices,” Nayar said.
She said that the RBI may consider a hike of interest rates by 60 bps over the next two reviews, taking the repo rate to 5.5 percent by September 2022, followed by a cessation to gauge the momentum of economic growth.
As per the report by PTI, CRCL LLP CEO and Managing Partner DRE Reddy said the main reason behind the inflation is a sharp increase in food, fuel, and vegetable prices. The cut in excise duty announced by the government and the good monsoon year are the factors that could ease inflation a little as we move forward in the year.
“The geopolitical tensions and crude price movement and commodity prices will guide WPI inflation going forward,” he added.
The RBI considers retail inflation as a deciding measure to frame monetary policy. The next meeting of the RBI’s interest-setting monetary policy committee will be held on August 2-4.
Retail inflation came in at 7.01% in June, breaching the Reserve Bank’s inflationary target threshold for six months consecutively. RBI’s inflation rate target is four percent with a two percent margin on either side.
To mediate high inflation, the RBI hiked the key interest rate by 90 basis points in the last two months.
The central bank revised the inflation projection by plus 100 basis points to 6.7 percent for 2022-23.