New Delhi: Wholesale price inflation remained in negative territory for the fifth straight month in August at (-) 0.52 per cent, though it rose sequentially from the previous month on account of firm prices of food items, especially vegetables, onion and pulses.
The wholesale price index (WPI) based inflation rate has been in the negative since April and was (-)1.36 per cent in July. In August last year, WPI inflation was 12.48 per cent.
According to economists, fading base effects and elevated food inflation led to a (-)0.52 per cent WPI in August, which came in higher than July numbers.
Inflation in food articles remained in double digit for the second straight month at 10.60 per cent in August, lower than 14.25 per cent in July.
Wholesale inflation in vegetables was 48.69 per cent in August, against 62.12 per cent in July.
In pulses, inflation was 10.45 per cent, while in onion it skyrocketed to 31.42 per cent in August. Fuel and power basket inflation was at (-)6.03 per cent in August, against (-) 12.79 per cent in July.
In manufactured products, inflation rate was (-)2.37 per cent, as against (-)2.51 per cent in July.
“The negative rate of inflation in August 2023 is primarily due to fall in prices of mineral oils, basic metals, chemical & chemical products, textiles and food products as compared to the corresponding month of previous year,” the commerce and industry ministry said on Thursday.
The softer pace of decline in WPI in August follows the larger than expected moderation in CPI inflation, data for which was released earlier this week.
Retail inflation data for August came in at 6.83 per cent in August, lower than 7.44 per cent in July.
Fitch Ratings in its Global Economic Outlook also raised 2023-end retail or CPI inflation projection to 5.5 per cent, from its previous forecast of 5 per cent. It, however, maintained RBI’s benchmark interest rate forecast at 6.5 per cent for end 2023.
The RBI expects annual CPI inflation to moderate in coming months given the short-term nature of vegetable price shocks. Nevertheless, the threat of El Ni o means that inflation could exceed our forecasts, although the impact on consumers and the economy is likely to be temporary, Fitch said.