Inflation: India's Wholesale Price Index Falls Sharply To 2.04% In July On Softer Manufactured Products Prices

India's wholesale price index (WPI) inflation follows the footsteps of its counterpart consumer price index (CPI) in July 2024, falling sharply to 2.04%. WPI cooled off owing to softening in manufactured product prices.

July 2024 WPI print is the softest since April, and also a sharp pullback from 3.36% in June 2024, which was the highest level since February. However, the latest WPI print is lower than market expectations.

On August 14, the Ministry of Commerce & Industry said, the annual rate of inflation based on all India Wholesale Price Index (WPI) numbers is 2.04% (Provisional) for July 2024 (over July 2023).

The ministry added that the positive rate of inflation in July 2024 is primarily due to an increase in prices of food articles, manufacture of food products, mineral oils, crude petroleum & natural gas, other manufacturing etc.

Here are the key performances of major groups in WPI:

1. Primary Articles (Weight 22.62%):- The index for this major group increased by 3.13% to 197.6 (provisional) in July 2024 from 191.6 (provisional) in June 2024. Prices of food articles (3.90%), crude petroleum & natural gas (1.22%), minerals (1.01%) and non-food articles (0.90%) increased in July 2024 as compared to June 2024.

2. Fuel & Power (Weight 13.15%): - The index for this major group increased by 0.14% to 147.9 (provisional) in July 2024 from 147.7(provisional) in June 2024. Prices of mineral oils (1.09%) increased in July 2024 compared to June 2024.

3. Manufactured Products (Weight 64.23%):- The index for this major group declined by 0.14% to 141.7 (provisional) in July 2024 from 141.9(provisional) in June 2024.

Out of the 22 NIC two-digit groups for manufactured products, 13 groups witnessed an increase in prices and 9 groups witnessed a decrease in prices.

Some of the important groups that showed month-over-month increases in prices are chemicals and chemical products; food products; fabricated metal products, except machinery and equipment; textiles; other manufacturing etc. Some of the groups that witnessed a decrease in prices are basic metals; other non-metallic mineral products; computer, electronic and optical products; machinery and equipment; furniture etc. in July 2024 as compared to June 2024.

WPI Food Index (Weight 24.38%):

The Food Index consisting of 'food articles' from the primary articles group and 'food product' from the manufactured products group increased from 190.3 in June 2024 to 195.4 in July 2024. The rate of inflation (Y-o-Y) based on the WPI Food Index decreased from 8.68% in June 2024 to 3.55% in July 2024.

As per Trading Economics, India's wholesale prices increased by 2.04% year-on-year in July 2024, slowing from a 3.36% rise in the previous month, which was the highest level since February, below market forecasts of a 2.39% gain. It marked the ninth consecutive period of wholesale inflation but the softest pace since April, with food prices rising the least in nine months.

WPI's latest performance comes after India's CPI nflation has eased to 3.54% in July 2024, the lowest number in last 59 months. This also means that CPI inflation is now well-below RBI's medium term target of 4%, hence, hinting at a rate cut possibility sooner than expected.