Wholesale price rise eases to three-month low at 15.2% in June

Food inflation surges; no change in overall price levels month-on-month

Inflation in wholesale prices moderated marginally from the record 15.88% pace in May to 15.18% in June, as a minor paring in the price rise of manufactured products, fuel and power as well as primary articles was offset by a surge in food price inflation to 12.41% from 10.89% in May. 

June’s wholesale inflation rate is the lowest in three months as the Commerce and Industry Ministry revised April’s Wholesale Price Index (WPI) to reflect a 15.38% price rise that month as opposed to 15.08% estimated earlier. This is the 15th successive month that wholesale price inflation is over the 10% mark in India. 

Despite the reduction in the headline rate, there was no change in the overall WPI index on a month-on-month basis. The Ministry said the high inflation in June was primarily driven by a rise in prices of mineral oils, food articles, crude petroleum & natural gas, basic metals, chemicals & chemical products, food products etc. as compared to a year ago. 

With June being the first full month after the excise duty cuts on fuel products in late May, fuel and power inflation dropped a tad from 40.6% in May to 40.4%. While diesel inflation eased to a four-month low of 54.9% in June from 65.2% in May, LPG price rise accelerated to 53.2% from 47.7% in May. Petrol price inflation moderated a little from May’s 58.8% to 57.8% in June.  

Inflation in food articles moved up to the highest level in several months to 14.4% from 12.3% in May, driven largely by a sharp surge in inflation for potatoes (39.4%), vegetables (56.75%) and fruits (20.33%). Inflation in cereals remained virtually unchanged at 8% in June, while wheat price rise eased marginally from 10.55% in May to 10.34%. Inflation in manufactured products dropped below 10% after four months, to hit 9.2%. 

Aditi Nayar, chief economist at rating firm ICRA, attributed the overall easing in inflation to the sharp corrections in the inflation for minerals and basic metals and non-food articles, amid fears of an impending global recession unfolded which have hit commodity prices.