India's wholesale inflation, tracked by the Wholesale Price Index (WPI), surged to a 16-month high of 3.36% on an annual basis in June, according to government data released on Monday. This marks an increase from 2.61% recorded last month, highlighting growing price pressures across key sectors of the economy.
Inflation in primary articles rose sharply to 8.80% in June from 7.20% in May. Meanwhile, fuel and power inflation moderated slightly to 1.03% from 1.35% in the previous month. The inflation rate for manufactured products also saw an uptick, climbing to 1.43% in June compared to 0.78% in May. Food articles witnessed a notable increase in inflation, reaching 8.68% as opposed to 7.40% in May.
"The positive inflation rate in June 2024 is primarily attributed to higher prices of food articles, manufactured food products, crude petroleum & natural gas, mineral oils, and other manufacturing goods," stated an official press release.
Key highlights from the food sector reveal significant price hikes. Wholesale vegetable prices soared by 38.76% in June 2024, reversing a 22% contraction from the previous year. Pulses saw a price increase of 21.64%, up from 9.21% a year ago, while fruit inflation stood at 10.14%, compared to a 2% contraction in June 2023. Notably, wholesale potato prices surged by 66.38%, contrasting with a 21.2% decline last year, and onion prices escalated by 93.4%, contrasting with a 4.30% decline in June 2023.
Addressing concerns, Reserve Bank of India (RBI) Governor Shaktikanta Das emphasized the central bank's vigilance against potential inflation risks, particularly from food inflation, which could disrupt India's disinflationary trajectory.
Recent retail inflation data also showed an uptick, rising to 5.08% in June from 4.75% in May. The RBI has maintained a repo rate of 6.5% since May 2022, aimed at curbing inflationary pressures by reducing economic demand.
Uncertainties persist around inflation, as highlighted in the latest RBI meeting minutes, with volatile food prices posing challenges to achieving the medium-term inflation target of 4%. Analysts, including Radhika Rao from DBS Bank, noted that while food prices have surged, disinflation in other sectors like fuel has moderated the overall inflation rate to 4.8% year-on-year, the softest in nearly a year.
Looking ahead, the RBI's Monetary Policy Committee (MPC) is expected to maintain a forward-looking approach, considering the lagged effects of weather-related factors on output and prices. Core inflation remains benign but is anticipated to stabilize and gradually increase by mid-year.
China’s GDP Growth Falls to 4.7% Amid Housing Market Struggles
PLI Scheme Propels Telecom Equipment Sales Beyond Rs 50,000 Cr
US Fed Confident in Achieving 2% Inflation Target Despite Challenges