India’s wholesale prices hit 16-month high in June amid rising vegetable price
PTC News Desk: June had a 16-month high of 3.36 per cent for wholesale inflation in the nation due to rising food costs, particularly for vegetables, and manufacturing goods.
For the fourth month running, inflation increased over this period. In May, the inflation rate based on the wholesale price index (WPI) was 2.61 per cent. In June 2023, it was (-) 4.18 per cent. The peak of wholesale inflation was reached in February 2023, when it was 3.85 per cent.
What caused wholesale prices in India to go up?
The Ministry of Commerce & Industry said in a statement on Monday that “the primary causes of the positive rate of inflation in June 2024 are the increases in the prices of food articles, the manufacturing of food products, crude petroleum & natural gas, mineral oils, other manufacturing, etc.”
The report shows that food item inflation increased by 10.87 percent in June compared to 9.82 percent in May.
Vegetable inflation increased to 38.76 percent in June from 32.42 percent in May. In the reviewed month, potato inflation was 66.37 per cent, while onion inflation was 93.35 percent. June saw a 21.64 percent increase in pulse inflation.
Other food commodities such as fruits experienced inflation of 10.14 per cent throughout the month, grains 9.27 per cent, and milk 3.37 per cent.
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What do experts have to say on the increasing wholeslae prices?
With the exception of fuel and electricity, all of the key segments contributed to the broad-based increase in WPI inflation in June 2024, according to ICRA Chief Economist Aditi Nayar.
Looking ahead, she stated that a favorable base and some cooling in global commodity prices are projected to push the headline WPI inflation down to roughly 2% in July 2024.
She stated that due to supply and demand imbalances, the average price of the Indian crude oil basket has been very volatile in July 2024, rising month over month to USD 86.6/bbl as of July 11.
She went on to say that rising crude oil prices could put higher pressure on the headline WPI inflation for the current month.
How much did the prices rise for petroleum and manufactured products?
The fuel and electricity basket saw a 1.03 percent inflation rate, which was slightly less than the 1.35 percent rate recorded in May.
Nonetheless, during the month, there was a double-digit price increase of 12.55 percent for natural gas and crude oil. In June, the inflation rate for manufactured goods increased to 1.43 percent from 0.78 percent in May.
The June WPI increase was consistent with the month’s retail inflation numbers. June had a four-month high of 5.1 per cent for retail inflation, according to figures released last week. The Reserve Bank of India (RBI) bases its monetary policy mostly on retail inflation.