Wholesale prices continue to fall
Context
For the fifth consecutive month, India’s wholesale prices declined in August, although the rate of drop was lessened from 1.36% to 0.52%, despite a decrease in food and primary component inflation to over 6% from over 7.5% in July.
Wholesale Price Deflationary Trend:
- In August, India’s wholesale prices continued their deflationary trend, which has now lasted five months.
- From 1.36% in July, the pace of drop in wholesale prices decreased to 0.52% in August.
Factors Affecting Deflation:
- The price of fuel and electricity played a major role in the decline in the deflation rate.
- Fuel and power price declines decreased from -12.8% in July to -6% in August.
- Sequential Inflation:
- Despite year-over-year deflation, the Wholesale Price Index (WPI) showed a sequential increase when comparing August to July.
- WPI increased by 0.33% in August, compared to a 2.01% growth in July.
Price Trends in Specific Categories:
- Price Trends in Specific Categories: Inflation in food and primary articles slowed, with primary food inflation falling from over 7.5% in July to around 6% in August.
- Falling prices in specific categories were blamed for the negative inflation rate:
- Oils derived from minerals
- Basic metals
- Chemicals and their byproducts
- Textiles
- Food and beverages
Details on Food Inflation:
- The wholesale food index grew by 5.6%.
- Primary food inflation remained elevated in August, at 10.6%, after reaching a high of 14.3% in July.
- Prices for vegetables increased by 48.4% in August, down from 62.1% in July.
- Cereal inflation fell to a three-month low of 7.25% in August.
- Paddy prices climbed by 9.2%, and pulse prices increased by 10.5%, the fastest rate in at least six months for both goods.
- Prices for onions increased by 31.4% in August, compared to 7.1% in July.
- Milk price inflation fell to a six-month low of 7.8%, but it was still only slightly slower than the 8.15% reported in July.
Future Prospects:
- Economists expect wholesale prices to recover from the deflationary trend in the next months.
- This shows that inflation may go up as some deflationary causes moderate or reverse.
Conclusion
In summary, these points provide a complete picture of India’s wholesale price trends in August, including factors influencing deflation, particular price moves in several categories, and price change projections for the future.
