New Delhi: wholesale price inflation On cheap food items, it softened for the second straight month in July at 11.16 per cent, even though prices of manufactured goods And crude oil hardened. However, wholesale price index inflation July remained in double digits for the fourth straight month, mainly due to a lower base than last year. WPI inflation was (-) 0.25 per cent in July 2020.
“The higher rate of inflation in July 2021 is primarily due to a lower base effect and an increase in crude petroleum and natural gas prices; mineral oil; Manufactured products such as base metals; food products; Cloth; Chemicals and chemical products etc. compared to the same month last year.” 3.09 per cent in June, even though onion prices jumped. Inflation in onion was at an all-time high of 72.01 per cent.
Inflation in crude petroleum and natural gas stood at 40.28 per cent in July, as against 36.34 per cent in June. Inflation in manufactured products stood at 11.20 per cent in July, as against 10.88 per cent in the previous month.
WPI inflation hit a double-digit 10.74 per cent in April, hitting a record high of 13.11 per cent in May. It came down to 12.07 per cent in June and 11.16 per cent in July. ICRA Chief Economist Aditi Nair said core-inflation is likely to hit 10.8 per cent in July 2021.
The core print is likely to soften gradually from August 2020 onwards due to the sharp rise in core-WPI inflation as well as the impact of concerns related to the Delta Plus variant on commodity prices, she said. “Headline WPI inflation is expected to remain in double digits till October 2021, and hence its moderation in the last two months is unlikely to provide any material comfort to the Monetary Policy Committee,” Nair said.
The RBI, which primarily takes into account retail inflation, kept interest rates unchanged at a record low in its monetary policy last week. It projected CPI or retail inflation at 5.7 per cent during 2021-22, higher than its earlier estimate of 5.1 per cent. Data released last week showed that retail inflation eased to 5.59 per cent in July, mainly due to moderation in food prices.
Sanjay Aggarwal, President, PHD Chamber of Commerce and Industry said that although WPI inflation is declining month on month, WPI inflation in manufactured products to rise from 10.9 per cent in June 2021 to 11.2 per cent in July 2021 is worrying as it influencing. Lowering the cost of production and cost-cost margins of producers. “High raw material prices are posing a serious challenge for small businesses to operate in times of difficult pandemic, which needs to be addressed immediately,” Agarwal said.
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