New Delhi: India’s wholesale price index (WPI)-based inflation cooled to a four-month low of 1.31 per cent in August, down from 2.04 per cent in July, primarily due to a reduction in the prices of manufactured products and food items.
Food price inflation stood at 3.11 per cent during the month, compared to 3.45 per cent in July, according to data released by the Ministry of Commerce and Industry on Tuesday. The data also showed that prices of other major sub-indices, such as manufactured products, witnessed a deceleration. Meanwhile, prices of fuel and power contracted during the month.
Within food articles, prices of cereals (8.44 per cent), paddy (9.12 per cent), and pulses (18.57 per cent) decelerated. Although there was a slight deceleration in the price of onion (65.75 per cent), inflation remained in double digits. On the other hand, the prices of potato (77.96 per cent) and fruits (16.7 per cent) accelerated during the month.
Manufactured products, which have a weight of 64.2 per cent in the index, also saw a decline in inflation to 1.22 per cent from 1.58 per cent in July. This was led by a deceleration in the prices of manufactured food products (3.61 per cent), beverages (1.9 per cent), textiles (1.79 per cent), wood products (3.17 per cent), and pharmaceuticals (1.97 per cent), among others.
Factory gate prices for fuel and power (-0.67 per cent) contracted as the prices of high-speed diesel (-3.03 per cent) and petrol (-4.23 per cent) further declined during the month. However, the price of cooking gas (14.4 per cent) accelerated.
This cooldown in factory gate inflation comes days after retail inflation rose marginally in August to 3.65 per cent from 3.6 per cent in July, yet remained below the Reserve Bank of India’s (RBI) medium-term target of 4 per cent for the second time in nearly five years. The Reserve Bank of India (RBI) tracks retail inflation for its monetary policy, and the reduction in WPI may help keep retail inflation low, albeit with a time lag.