WPI inflation eases on softer energy prices, economists expect moderation ahead
New Delhi, Aug 14
India's wholesale price inflation moderated marginally to 9.78 per cent in July from 9.87 per cent in June with economists and industry leaders on Friday attributing the easing to softer global energy prices while expecting inflationary pressures to gradually moderate.
According to them, the moderation was led by a sharp decline in fuel and power inflation, which fell to 20.05 per cent in July from 27.41 per cent in June.
Rajani Sinha, Chief Economist, CareEdge Ratings, said the decline in fuel and power inflation reflected lower prices of mineral oils as well as crude petroleum and natural gas amid sequential softening in global energy prices.
However, she also said that the global geopolitical environment remained volatile and the trajectory of fuel inflation would continue to depend on international energy markets.
Manufactured product inflation increased, reflecting the pass-through of higher input costs, while food inflation remained elevated at 5.4 per cent in July.
Similarly, industry body PHDCCI said the decline was primarily driven by a significant cooling in fuel and power inflation, indicating some easing in energy-related cost pressures.
The chamber also noted that manufacturing activity remained strong with manufacturing inflation at 8.29 per cent.
"While the manufacturing sector continues to navigate through high input costs, the neutral stance of the recent monetary policy will support manufacturers by allowing for loans at stable interest rates," said Rajeev Juneja, President, PHDCCI.
According to PHDCCI, higher inflation in chemicals and chemical products, basic metals and electrical equipment reflected healthy industrial demand, particularly from renewable energy-related segments and associated supply chains.
It also highlighted that the primary articles group recorded inflation of 8.52 per cent in July, while food articles inflation stood at 5.44 per cent.
PHDCCI said food product manufacturers continued to witness firm demand conditions, with inflation in manufactured food products at 8.89 per cent during the month.
Looking ahead, the chamber said the wholesale inflation outlook remains elevated but is showing signs of gradual moderation, supported by easing energy costs, improving domestic supply conditions and softer input prices.
"Overall, the immediate outlook is one of elevated but potentially moderating wholesale inflation," said Ranjeet Mehta, CEO and Secretary General, PHDCCI.
— IANS
Reader Comments
The fuel and power inflation dropping from 27.41% to 20.05% is a big deal. But food inflation at 5.4% is still a concern for households. My monthly grocery bill has gone up significantly. The government needs to focus on supply chain issues and ensure essential commodities stay affordable.
Interesting to see the nuances here. While energy costs are softening, manufactured products inflation rising to 8.29% shows that input costs are still high. The RBI's neutral stance makes sense - they can't be too aggressive with rate cuts yet. Let's hope the moderation continues through the festive season.
PHDCCI's point about renewable energy demand driving inflation in chemicals and electrical equipment is interesting. It's a sign of the green transition. But the 'pass-through of higher input costs' to manufactured products concerns me - that eventually hits the consumer. Will keep an eye on the next few months' data.
It's reassuring that experts expect moderation ahead. However, as someone who runs a small manufacturing unit, I haven't seen significant relief in raw material costs. The WPI number is a lagging indicator. The ground reality is that we're still paying premium prices for steel and chemicals. 😕
Finally, some good news after months of worrying data! The fuel price moderation is helping, but we still have a long way to go. The government should consider reducing excise duties on fuel further to ease the burden on the middle class. Also, weather conditions need to improve for better food supply and lower inflation.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.