New Delhi, July 14 (Representative) India’s wholesale inflation eased to 15.18 per cent in June, 2022 from 15.88 per cent in May, showed the data released by Commerce and Industry Ministry on Thursday. The wholesale price index (WPI) based inflation was 12.07 per cent in June, 2021. The wholesale inflation has been in double-digit for the last almost 15 months.”The high rate of inflation in June, 2022 is primarily due to rise in prices of mineral oils, food articles, crude petroleum & natural gas, basic metals, chemicals & chemical products, food products etc. as compared to the corresponding month of the previous year,” an official statement said. The data showed food inflation during June was 14.39 per cent as prices of fruits, vegetables and potatoes rose sharply over the year-ago period. Fuel & power basket inflation was 40.38 per cent in June.
Crude petroleum & natural gas inflation stood at 72.98 per cent in the previous month.Manufactured products inflation came in at 9.19% during the month under review. The WPI captures the average movement of wholesale prices of goods and is primarily used as a GDP deflator. It reckons only basic prices and does not include taxes, rebate/trade discounts, transport and other charges. The government data released earlier this week had shown a bit softening in retail inflation too. The consumer price index (CPI) based retail inflation had come in at 7.01% in June 2022 as compared to 7.04% in the previous month.Commenting on the WPI numbers, ICRA Chief Economist Aditi Nayar said, “With the spike in the US inflation, expectations on aggressive monetary tightening by the US Fed are likely to drive further global slowdown fears, dampening commodity prices.
In the Indian context, this should translate into lower WPI inflation faster, with a relatively slower transmission to the retail inflation.” “In our view, while rate hikes in the US may be sharp and front-loaded, they may end sooner than expected by the markets, if the recent downtrend in global commodity prices sustains. We expect the WPI inflation to ease to 13% in July 2022, reflecting the ongoing correction in global commodity and fuel prices as well as domestic food prices,” she said. Nayar expects 60 bps of rate hikes by the Monetary Policy Committee (MPC) over the next two reviews, taking the repo rate to 5.5% by September 2022, followed by a pause to ascertain the momentum of economic growth. The Reserve Bank of India (RBI) has hiked policy repo rate by 90 bps in the last two months to contain inflation. It is expected to further raise the key lending rate in upcoming monetary policies.