India's wholesale inflation drops to 2% in July
India's wholesale inflation, measured using the Wholesale Price Index (WPI), has seen a significant decrease to 2.04% in July on an annual basis. This is a substantial drop from June's 16-month high of 3.36%, according to government data released today. The figure is also lower than the 2.39% predicted by a Reuters poll, indicating a more substantial decrease than anticipated by experts.
Primary articles' inflation also decreases
The annual rate of inflation for primary articles within the WPI also saw a decrease, standing at 3.08% in July compared to June's 8.80%. However, not all sectors experienced a decline. Inflation for manufactured products witnessed a slight increase, rising to 1.58% in July from June's figure of 1.43%. Similarly, fuel and power inflation also rose to 1.72%, up from June's 1.03%.
Retail inflation hits 5-year low
Retail inflation for July also slowed down to 3.54%, marking its lowest point in nearly five years due to a significant decline in food inflation. This trend is particularly noteworthy as it indicates a broader slowdown in price increases across the retail sector. Reserve Bank of India Governor, Shaktikanta Das, commented on this situation during the recently concluded Monetary Policy Committee (MPC) meeting.
RBI maintains inflation forecast
Despite these changes in inflation rates, the RBI has decided to keep its inflation forecast for this fiscal year unchanged at 4.5%. The MPC voted to maintain rates at 6.5%, even amid concerns about food price trajectory potentially impacting core inflation, and escalating geopolitical tensions threatening comfort on crude prices easing to multi-month lows.
