Tue Sep 17 06:50:56 UTC 2024: ## India’s Wholesale Inflation Cools to Four-Month Low in August
**NEW DELHI** – India’s wholesale price index (WPI) based inflation eased to a four-month low of 1.31% in August, driven by falling costs of crude oil, steel and cement. This figure was lower than the 1.85% increase anticipated by economists and down from 2.04% in July, according to government data released on Tuesday.
Despite the overall decline, prices of key food staples like potatoes and onions saw sharp increases, rising between 16% and 78% year-on-year due to heavy rains in some parts of the country. Overall food prices rose 3.26% year-on-year, compared to 3.55% in July.
The government faces pressure to contain food prices and appease farmers after the ruling Bharatiya Janata Party experienced losses in rural constituencies during recent elections.
The Reserve Bank of India (RBI), which largely monitors headline retail inflation to guide monetary policy, is widely expected to maintain its benchmark repo rate at its policy review from October 7-9.
Despite the cooling of wholesale inflation, economists remain cautious, citing potential pressure on headline inflation in September due to heavy rainfall impacting crop planting. ICRA ratings agency expects WPI inflation to rise to 2% in September.
On a positive note, vegetable prices saw a 10.01% year-on-year decline in August, indicating improved market supplies. Additionally, falling global commodity prices have benefited India’s manufacturing sector, with manufactured product prices increasing by 1.22% year-on-year. Fuel and power prices also declined by 0.67% year-on-year, aided by the drop in global crude oil prices.
While India’s retail inflation remained below the RBI’s target of 4% for the second consecutive month, high food prices have dampened expectations of a dovish stance in the upcoming monetary policy meeting.
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