Wholesale inflation has maintained its negative trend for the fourth consecutive month, registering a decline of -1.36% in July. This ongoing deflation can be attributed to the gradual decrease in fuel prices, although the cost of food items has shown an upward trajectory.
The inflation rate, measured by the wholesale price index (WPI), has been consistently in the negative zone since April, reaching -4.12% in June. A year ago, in July, it had soared to a high of 14.07%.
In contrast, the inflation rate for food articles has surged by a significant 14.2% in July, compared to the 1.32% recorded in June.
The Ministry of Commerce and Industry stated on August 14 that the decrease in July's inflation rate can be primarily attributed to the price reductions in mineral oils, basic metals, chemicals and chemical products, textiles, and food items.
The inflation rate within the fuel and power category saw a minor decrease from -12.63% in June to -12.79% in July.
Within the domain of manufactured products, the inflation rate stood at -2.51%, a slight improvement from the -2.71% recorded in June.
During its latest meeting, the Reserve Bank of India (RBI) decided to maintain the interest rates at 6.5% for the third consecutive time. However, it hinted at the possibility of implementing a tighter monetary policy if escalating food prices contribute to higher inflation.
RBI Governor Shaktikanta Das emphasized that the work to control inflation is still ongoing. He highlighted the persistent risks stemming from fluctuating global food and energy prices, ongoing geopolitical tensions, and uncertainties related to weather patterns.
The RBI revised its inflation projection for the current fiscal year, ending in March 2024, from 5.1% to 5.4%, citing mounting pressures from rising food prices.
For its policy formulation, the central bank relies on the retail or consumer price index-based inflation. Data for retail inflation in July is expected to be released later today.
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