Wholesale inflation drops to four-month low of 4.53% in August

Inflation based on wholesale prices eased to a four-month low of 4.53% in August on softening of prices of food articles, especially vegetables.

The Wholesale Price Index (WPI) based inflation stood at 5.09% in July and 3.24% in August last year.

According to government data released on Friday, food articles registered deflation at 4.04% in August 2018. Last month, deflation in this category was 2.16%.

Deflation in vegetables was 20.18% in August, against 14.07% in the previous month.

Deflationary trend in food articles offset the double-digit inflation in ‘fuel and power’ basket in August. Inflation in this category was 17.73% as prices of domestic fuel increased during the month, in line with high global crude oil rates.

While inflation in the liquefied petroleum gas (LPG) was 46.08%, in diesel and petrol, it was 19.90% and 16.30%, respectively, in August.

Among food articles, potato inflation continued to rule high at 71.89% in August, while onion and fruits witnessed deflation of 26.80% and 16.40%, respectively.

Deflation continued in pulses at 14.23% in August. The 4.53% inflation is the lowest in four months, and a lower inflation than this level was last seen in April at 3.62%.

As per the data, the WPI inflation for June was revised downwards to 5.68% from the provisional estimate of 5.77%.

Petrol, diesel costlier
Brent crude oil price is hovering at around $79 a barrel. This, along with a depreciating rupee, has increased the oil import bill, thereby making petrol and diesel costlier.

The petrol price on Thursday climbed to an all-time high of ₹81 a litre in Delhi, while in Mumbai it inched up to ₹88.39. A litre of diesel in the national capital was priced at ₹73.08 and ₹77.58 in Mumbai.

Data released earlier this week showed that retail inflation eased to a 10-month low of 3.69% in August. The Reserve Bank of India (RBI) mainly takes into account retail inflation data while formulating the monetary policy.

In its third monetary policy review for the fiscal, the RBI last month hiked interest rate by 0.25% to 6.5% on inflationary concerns.

For July-September, the RBI pegged CPI-based retail inflation at 4.2%, which it saw firming up to 4.8% in the second half of the current fiscal.

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