14-08-2023 : India’s wholesale inflation has sustained its presence within the negative zone, yet displayed a slight uptick to reach (-) 1.36% in July 2023, according to data released by the Ministry of Commerce and Industry on Monday. This marks the fourth consecutive month of experiencing negative wholesale price index (WPI)-based inflation. The month-on-month alteration in the WPI index for July 2023 registered at 1.95% in comparison to June 2023.
The decline in inflation rate for July 2023 is primarily attributed to a decrease in the prices of mineral oils, basic metals, chemical & chemical products, textiles, and food products, as indicated by the official press release. This dynamic has led to a discernible shift in various sectors. Food articles inflation, for instance, witnessed a surge, climbing to 14.25% from 1.32% in June this year. Conversely, fuel & power inflation exhibited a slight easing, descending to (-) 12.79% in July 2023 from (-) 12.36% in June. Meanwhile, manufactured products inflation stood at (-) 2.51% in July 2023, marking a marginal decline from (-) 2.71% in the previous month.
As the global commodity prices show signs of sequential escalation and the impact of the base effect diminishes, the trajectory of WPI inflation is expected to ascend in the coming months. This anticipated rise will likely be gradual, a departure from the record low level registered in June of the same year, although the general trend will remain contractionary.
The WPI serves as a measure of the average movement of wholesale prices of goods and is primarily deployed as a GDP deflator. Notably, it solely factors in basic prices and excludes taxes, rebate/trade discounts, transportation costs, and other associated charges.
Amidst this economic backdrop, the Reserve Bank of India (RBI) continues to monitor and factor in retail inflation while conducting reviews for its bi-monthly monetary policy decisions.