Inflation at 5-mt low; monsoon still a worry

However, food articles inflation rose to 8.43% with vegetable prices rising 22.8% led by sharp spurt in potato and onion

New Delhi : India’s inflation rate based on the Wholesale Price Index fell to a five-month low of 5.19% in July from 5.43% in the previous month, mainly on account of the statistical effect of a high base, though the impact of poor monsoon on overall price situation continues to be a concern.

The Wholesale Price Index based inflation was at 5.43 per cent in June, and 5.84 per cent in July last year, according to the data released by government on Thursday.

Inflation in the overall food articles basket, which accounts for 14 per cent of the total WPI, rose to 8.43 per cent against 8.14 per cent in June.

Within food, vegetable prices rose 22.8% on month led by a 12.1% spurt in potato and a 35.1% rise in onion prices. Prices of food, especially vegetables, rose as rains were deficient during the month. The country has received 470.2 mm of rainfall so far this season, 18% below normal. Primary articles inflation fell to 6.78% in July from 6.84% in June.

Inflation for the eggs, meat and fish category stood at 2.71 per cent in July as against 10.27 per cent in the previous month.

Commenting on inflation, Ficci President Siddharth Birla said: “While risks on account of monsoon and volatility in crude oil prices have receded for the time being, some degree of ambiguity remains.

Inflation continues to be a concern as prices of food articles are still elevated… It needs to be assured that the industrial growth is not stifled and recent momentum seen in IIP numbers is kept pace with.”

 According to the data, the rate of price rise in pulses was 3.31 per cent. It was at 4.46 per cent for cereals. For rice, it was 6.85 per cent and wheat 1.02 per cent in July.

 Inflation in the manufactured products was at 3.67 per cent, and non-food articles, which include fibre, oil seeds and minerals, at 3.32 per cent. Inflation in the fuel and power category, meanwhile, was down at 7.40 per cent from the previous month.

The WPI data was revised upwards for May to 6.18 per cent, from 6.01 per cent as per provisional estimates.

The Reserve Bank in its monetary policy review last week had cautioned that continued uncertainty over monsoon could stoke food inflation, but expressed the hope that government policies will improve supplies in the coming months. Consumer Price Index based retail inflation for July, in contrast to WPI, rose to 7.96 per cent over a price rise of 7.46 per cent in the previous month.

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Free Press Journal