Producers’ inflation based on the Wholesale Price Index (WPI) decreased to 15.1% in June against 15.9% in May, the Ministry of Commerce and Industry said in a release on Thursday. On Tuesday, the Statistics Ministry said retail inflation based on the Consumer Price Index (CPI) dropped to 7.01% in June from 7.04% in May. Notably, the WPI and the CPI were above 15% and 7%, respectively, during the last three months.
“While the easing of many of the global commodity prices is a comforting factor, volatile crude oil prices and the weakening of rupee against the dollar continue to pose an upside risk to the wholesale inflation number. Food inflation will continue to inch higher due to accelerating vegetable prices. Consequently, we expect WPI to remain in doubledigits till the second quarter of this fiscal,” said, Rajani Sinha, Chief Economist, Care Ratings.
Aditi Nayar, Chief Economist, ICRA, said that the core inflation dropped by 0.7 percent in month-on-month terms after rising for 24 consecutive months. The fall also pulled the YoY core inflation to single digits (9.3% in June 2022) after a gap of 13 months. The minerals and basic metals displayed a sharp MoM correction in June 2022, as fears of an impending global recession, unfolded, dampening commodity prices, she added.
“In our view, while rate hikes in the U.S. may be sharp and frontloaded, 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 nearly 13% in July 2022, reflecting the ongoing correction in global commodity and fuel prices as well as domestic food prices,” she said.