July wholesale inflation rises to 1.88%

Wholesale price index (WPI) or wholesale inflation for the month of July 2017 rose 1.88% as against analyst expectations of 1.40%. WPI in July of 2016 stood at 0.63% while in June 2017 it rose by 0.9%. 

Ministry of Commerce and Industry, in a statement said, "The index for primary articles rose by 4.3% to 132.4 (provisional) from 126.9 (provisional) for the previous month."

source: tradingeconomics.com

Wholesale inflation in food articles rose 2.15% while that of fuel, power, lighting rose 4.37%. The data showed that wholesale inflation for manufactured products rose 2.18% in July 2017 as against the same month of last year. 

The government said that WPI inflation for May 2017 was revised to 2.26% as againt 2.17% as reported earlier. 

Analysts expected WPI inflation to rise in July 2017 as prices picked up in the month. However, WPI continues to be well below the Reserve Bank of India's (RBI) target. The central bank expects retail inflation could accelerate to 3.5% to 4.5% in October-December.

Reuters said, "Bountiful monsoon rains this year are expected to lead to another bumper harvest, further dampening food prices, which contribute near 50% of the consumer price index."

RBI cut repo rate by 25 basis points bringing interest rates to multi-yer lows of 6% earlier this month because of disinflationary pressures. 

The data show that WPI inflation in pulses dropped 32.56% while potatoes saw a drop in wholesale inflation of 42.45%.