NEW DELHI: In a further sign of easing inflationary pressures, the wholesale price index-based inflation eased in July to 13.93 per cent from 15.18 per cent in the previous month, on account of a decline in prices of food articles like vegetables, milk, eggs, meat and fish, Commerce Ministry data showed.
Wholesale prices of crude oil, petroleum and natural gas also came down substantially in July. Prices of food articles came down to 10.77 per cent from 14.39 per cent in the previous month. Vegetables recorded the highest fall at 18.25per cent from 56.75 per cent in June. Inflation in the fuel and power basket rose to 43.75 per cent in July from 40.38 per cent in June. The WPI-based inflation was also a tad lower in manufactured products at 8.16 per cent in July as against 9.19 per cent in the previous month.
This is the 16th straight month when it is in double digits. It is to be noted that the WPI-based inflation was at an all-time high in the month of May at 15.88 per cent, whereas in July last year, it stood at 11.57 per cent. Analysts are now hoping that Wholesale inflation by October would come down to a single digit. “We see a likelihood of the first single-digit WPI inflation print by October 2022, after a gap of 18 months, if the downtrend in commodity prices sustains,” says rating agency ICRA.
Retail inflation, which the Reserve Bank of India (RBI) keeps track of to frame monetary policy, stood at 6.71 per cent in July. RBI has the mandate of keeping retail inflation in the range of 2 per cent - 6 per cent. This was the seventh consecutive month when the retail inflation crossed the upper limit of 6 per cent. It stood at 7.01 per cent in the month of June. It has projected retail inflation of 6.7 per cent for the current fiscal with inflation remaining above 6 per cent for the first three quarters of FY23.
The apex bank has so far raised the repo rate three times to contain inflation and in the month of July, it increased the repo rate by 50 basis points to 5.40 per cent. This is the third time when the Central Bank had to raise the short-term lending rate to tame the raging inflation. It had raised the repo rate by 40 basis points in May and then by 50 basis points in June. Since May this year, the RBI has increased the repo rate by 1.40 per cent.