WHOLESALE PRICES ON THE RISE : WHAT'S COOKING?

WHOLESALE PRICES ON THE RISE : WHAT'S COOKING?

India's wholesale inflation rate jumped to 3.36% in June up from 2.61% in May, as shown by data the Commerce Ministry put out on Monday. The rise measured by the Wholesale Price Index (WPI) came from climbing food and energy prices.

The increase has its roots in higher prices across several areas including food items, food product manufacturing, crude oil & natural gas, mineral oils, and other manufacturing sectors.

The WPI for all commodities increased from 153.3 in May to 153.9 in June showing widespread price hikes across many sectors. Food articles jumped a lot, with the food index going up from 185.7 to 190.3 pushing the yearly food inflation rate from 7.40% to 8.68%.

Primary articles, including farm products and minerals, saw their index climb to 191.6 leading to an inflation rate of 8.80% for this group. Manufactured products, the biggest part of the WPI also went up, with its index reaching 141.9 and inflation rate hitting 1.43%.

Even though the overall trend was upward, the fuel and power index went down from 150.6 to 147.7, and its inflation rate dropped to 1.03%.

The press release stated that significant jumps happened in food products, chemicals, textiles, rubber & plastics products, and motor vehicles. On the other hand, drops occurred in basic metals, non-metallic mineral products, and pharmaceuticals, among others.

Aditi Nayar, Chief Economist at ICRA Ltd., shared her thoughts on the data saying, "The rise in WPI inflation to 3.4 per cent in June 2024 was widespread  and matched expectations showing the third month in a row with a big step up (+0.3 per cent in March 2024, +1.2 per cent in April 2024 and +2.6 per cent in May 2024). Looking forward, we expect the headline WPI inflation to fall to about 2.0 per cent in July 2024, due to a helpful base and some easing in global commodity prices."

The government put together the WPI data for June getting responses from 87.8% of the sources. The Ministry pointed out that these numbers might change later. You can expect to see the next WPI report covering July 2024, on August 14.

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