Replicating the retail inflation trend rate, India’s wholesale price inflation in August broke down to 4.53% owing to a decrease in the prices of food and vegetable.
The Ministry states that “Build up inflation rate in the financial year so far was 3.18 per cent compared to a build-up rate of 1.41 per cent in the corresponding period of the previous year.”
Reportedly, The trends of wholesale price index were exactly as predicted. In a news report by NDTV, ICRA principal economist Aditi Nayar said: “As expected, the disinflation in food items worsened in August 2018, given the unseasonably slack momentum in prices of various perishable items.”
Wholesale Inflation and Prices of Commodities
The Government data reflected that food prices came down to (-)4.04% in August, whereas prices of vegetable declined (-) 20%. Pulse price kept on declining to 14%. On the contrary, potato continued to witness an inflationary trend at 71.89% in August. While onion and fruits witnessed deflation of about 27% and 16% respectively.
The cost of fuel products went sky-rocketing with an inflation of around 17.73 making it a national concern. Expenses on manufactured products accounted for 4.43% from 4.26%.
Core Inflation and Monetary Policy Formulation
The report released recently revealed the dipping rate of retail inflation to 3.69% in August. RBI primarily counts retail inflation in creating monetary policy.
Core inflation has been advancing slowly from 4.8 in July to 5% in August. The rising inflation can provoke members of monetary policy to bid for a rate hike in the coming policy meeting.