Wholesale Inflation Rises to Four-Month High of 3.24% in August

Vegetable prices shot up by 44.91 percent in August as against 21.95 percent in July. 

2 min read
Low likelihood of a rate cut in the April monetary policy review. (Photo: Reuters)

Wholesale inflation rose to a four-month high of 3.24 percent in August as prices of food articles, led by onions and vegetables, soared. Inflation based on the wholesale price index (WPI) was 1.88 per cent in July 2017 and 1.09 per cent in August 2016.

The last such high level of inflation was witnessed in April when the rate of price rise was 3.85 per cent.

The government data released on Thursday showed that prices of food articles went up by 5.75 percent in August on a yearly basis, as against 2.15 percent in July.

Vegetable prices shot up by 44.91 percent in August, as against 21.95 percent in July.

Onion prices witnessed a sharp surge at 88.46 percent in August, as against a contraction of 9.50 percent in the previous month

Inflation in manufactured products witnessed a slight increase at 2.45 percent in August, against 2.18 percent in July.

In fuel and power segment, inflation saw a sharp surge to a near double-digit inflation at 9.99 percent, against 4.37 percent in July.

Fuel inflation shot up as petrol and diesel prices continued to remain high relentlessly on global crude oil rates, while power tariffs shot through the roof on lower domestic production.

Data released earlier this week showed retail inflation rose to a five-month high of 3.36 percent in August due to costlier vegetables and fruits.

Last month, the Reserve Bank of India (RBI) cut policy repo rate by 0.25 percent to six percent citing reduction in inflation risk. The rate cut was the first in 10 months – and brought policy rates to near seven-year low.

The RBI said it will endeavour to keep retail inflation close to four percent but in the near term, there might be some uptick on account of pay commission payouts and price adjustments post GST rollout from 1 July.

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