New Delhi, September 14
Inflation based on wholesale prices edged up to 11.39% in August, mainly due to more expensive manufactured goods, even as food prices fell.
Resuming the two-month easing trend, WPI inflation rose in August and remained in double digits for the fifth consecutive month.
In July 2021, WPI inflation was 11.16%, while in August 2020 it was 0.41%.
“The high inflation rate in August 2021 is mainly due to higher prices for non-food items, mineral oils; crude oil and natural gas; manufactured goods such as base metals; foodstuffs; textiles; chemicals, etc. compared to the corresponding month of the previous year, ”the Ministry of Commerce and Industry said in a statement.
Inflation for food items slowed for the fourth consecutive month, registering (-) 1.29% in August, from 0% in July, even as onion and pulse prices soared.
Inflation for onions was high at 62.78 percent, while that for pulses was 9.41 percent. In vegetables, it was (-) 13.30 percent in August.
Inflation for crude oil and natural gas was 40.03 percent in August.
In manufactured products, inflation stood at 11.39% in August, against 11.20% in July. Inflation for manufactures remained in double digits for the fourth consecutive month.
The RBI, which primarily takes into account retail price inflation, last month kept interest rates unchanged at record highs in its monetary policy. He projected the CPI or retail price inflation at 5.7% in 2021-2022, up from its earlier projection of 5.1%.
Data released on Monday showed retail price inflation eased to a four-month low of 5.3 percent in August, from 5.59 percent in the previous month, helped by subdued consumer prices. food items.
ICRA Chief Economist Aditi Nayar said WPI core inflation had shown an uninterrupted hardening for 15 consecutive months to reach a new all-time high of 11.1% in August 2021, denying the anticipation that the July 2021 impression would turn out to be the peak.
“WPI headline and core inflation are expected to print in double digits through October 2021, then halve by year-end. The slight increase in WPI’s impression of August 2021 does not change our expectation of a status quo at the next review of the October 2021 MPC, ”Nayar added.
India Ratings and Research Senior Economist Sunil Kumar Sinha said that in addition to the base effect, August 2021 wholesale inflation was due to high fuel and electricity inflation at 26.1% and inflation of manufactured products at 11.4%.
In the fuels and electricity category, LPG, gasoline and diesel experienced inflation of 48.1%, 61.5% and 50.7% respectively.
“Such a high level of fuel inflation in addition to its first-round effect also translates into a second-round effect in the economy. In addition to increasing transportation costs, fuel prices represent a cost to almost all manufacturing sectors, directly or indirectly.
“Higher fuel inflation increases input costs in all sectors by increasing the base cost of raw materials / intermediate goods / labor costs, etc. This in turn pushes the prices / inflation of manufactured goods, ”Sinha said.
Firming inflation despite weak demand may seem a bit confusing, but as manufacturers increasingly pass higher input costs on to their output prices, wholesale manufacturing and core inflation have high and sustained inflation, he said.
“India Ratings and Research estimates that wholesale inflation will remain high until 3QFY22,” Sinha added. PTI