Monday 9th Sep, 2024
New Delhi: India’s wholesale price inflation rose to 3.24% from a year ago, its fastest pace in four months, driven by higher prices of food and fuel products, data showed.
The rise compares with a 3% increase forecast by economists in a Reuters poll and a provisional 1.88% rise in July.
Wholesale food prices in August rose 4.41% on year, compared with a 2.12% rise a month earlier, government data showed on Thursday.
Earlier this week, the government reported that inflation rate based on retail prices also rose sharply to 3.36%. Although the August numbers appear moderate, prices are seen rising in the coming months as demand picks up ahead of the festive season and food prices spike because of drought-like situation in many states.
The faster-than-expected rise in inflation has a bearing on the Reserve Bank of India, which is being nudged to lower interest rates in order to revive investment and growth that have gone sluggish in recent quarters.
Latest data on industrial production, released on Tuesday, showed industrial growth marginally improved to 1.2% in July compared to a contraction of 0.2% a month earlier. It was, however, sharply lower compared to 4.5% growth seen in July last year.
The industry has been pushing for cuts in interest rates to help revive investment and reverse the sluggish growth in factory sector.
Last month, the RBI cut its main policy rate by 25 basis points to 6%, the lowest since 2010, while keeping its policy stance at “neutral”. Analysts said a rise in inflation for two straight months has reduced the chances of another rate cut by the RBI, which has a central inflation target of 4%.
“We are of the opinion that RBI will not deliver any rate cut this calendar year,” Hitesh Jain, an analyst at IIFL Wealth Management, told Reuters earlier this week.
Vegetable prices shot up by 44.91% in August, as against 21.95% in July.
Onion prices witnessed a sharp surge at 88.46% in August, as against a contraction of 9.50% in the previous month.
Inflation in manufactured products witnessed a slight increase at 2.45% in August, against 2.18% in July.
In fuel and power segment, inflation saw a sharp surge to a near double digit inflation at 9.99%, against 4.37% in July.
Fuel inflation shot up as petrol and diesel prices continued to remain high relentlessly on global crude oil rates, while power tariffs shot through the roof on lower domestic production.
Apart from vegetables, the food articles that saw rise in prices include pulses, fruits (7.35%), egg, meat and fish (3.93%), cereals (0.21%) and paddy (2.70%).
However, potato continued to see deflation at 43.82% and pulses (-)30.16%.
The final print of June WPI inflation remained unchanged from provisional estimate of 0.90%.