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India's wholesale price index (WPI)-based inflation experienced a decline in August 2024, reaching a four-month low of 1.31%. This decrease was attributed to a reduction in the prices of both manufactured goods and food items. The Ministry of Commerce & Industry released the provisional data on Tuesday, highlighting the deflationary trend in the country's wholesale market.
In comparison to the previous month's 2.04% inflation rate, the August figure indicates a significant softening in price pressures. Earlier in the year, inflation had climbed to 3.36% in June and 2.61% in May. The current trend suggests a possible cooling off of the inflationary environment, although analysts are monitoring the potential impact of upcoming price fluctuations.
The month-over-month change in WPI for August 2024 stood at -0.45%, reflecting a slight deflationary period compared to July. Further examination of the data reveals that the rate of inflation based on the WPI Food Index decreased from 3.55% in July to 3.26% in August. This suggests a gradual slowdown in the rising prices of food items.
A breakdown of the WPI inflation components reveals that the inflation rate for food articles reached 3.11% in August, down from 3.45% in July. Primary articles saw inflation at 2.42%, a decrease from the previous month's 3.08%. Meanwhile, fuel and power inflation fell from 1.72% to -0.67% in August. Manufactured products inflation stood at 1.22% for the month.
Specific food categories demonstrated varying levels of inflation. Vegetable inflation decreased to -10.01% in August from -8.93% in July. Pulses inflation, on the other hand, rose to 18.57% during the month. Wheat inflation came in at 7.28%, while cereals inflation stood at 8.44%. Eggs, Meat & Fish inflation experienced a slight decline to -0.69% in August. Notably, potato and onion inflation reported significant increases, reaching 77.96% and 65.75% respectively.
Beyond food items, non-food articles reported a WPI inflation rate of -2.08%. Minerals inflation reached 8.76%, while Crude Petroleum & Natural gas posted a wholesale inflation of 1.77% in August. Crude petroleum itself saw a slight deflationary trend at -0.98% for the month.
Experts have provided their insights into the recent WPI inflation figures. Rahul Agrawal, Senior Economist at ICRA Ltd, noted a decline in core WPI inflation to 0.7% in August from 1.2% in July. This decline was attributed to a continued softening in global commodity prices. He further observed that WPI-food inflation eased slightly to a 10-month low of 3.3% in August, driven by a sharp sequential decline in the primary food articles index.
Looking ahead, ICRA anticipates an increase in WPI inflation to approximately 2.0% in September 2024 from 1.3% in August. This projection takes into account the potential for an adverse base effect on the primary food articles category, which could push up year-on-year inflation figures for the ongoing month.