Lower fuel prices and higher food prices kept the Wholesale Price Index (WPI) below objective for the fourth straight month in July, at (-)1.36%.
The WPI-based inflation indicator has been negative since April; in June, it was (-)4.12%. Compared to July last year, it was 14.07%. Food inflation rose from 1.325% in June to 14.25% in July.
The Commerce and Industry Ministry said that mineral oils, basic metals, chemicals and chemical products, textiles, and food prices fell in July 2023, lowering inflation.
The June and July fuel and electricity inflation rates were -12.63 and 12.79 percent. Manufacturing goods inflation fell to 2.51% in July from 2.71% in June. The RBI kept interest rates at 6.5% for the third week in a row last week, but hinted at tighter policy if food prices increase.
RBI Governor Shaktikanta Das says inflation must be addressed. Changes in global food and energy costs, geopolitical tensions, and weather concerns continue to threaten inflation.
The RBI revised its inflation prediction for the current fiscal year, which ends in March 2024, from 5.1 percent to 5.4 percent, citing rising food costs.
The central bank bases monetary policy on retail or consumer price index inflation. Retail inflation for July will be published later today.
Conclusion:-
Despite rising food prices, wholesale price index (WPI)-based inflation stayed below goal at (-)1.36% in July due to dropping gasoline prices. The Commerce and Industry Ministry said that mineral oils, basic metals, chemical products, textiles, and food prices fell in July 2023, lowering inflation. For the third month in a row, the RBI kept interest rates at 6.5% but hinted at tighter policy if food costs keep rising rapidly. RBI Governor Shaktikanta Das cited unpredictable global food and energy costs, geopolitical uncertainty, and meteorological challenges to address inflation. The RBI revised its inflation prediction for the current fiscal year, which ends in March 2024, from 5.1 percent to 5.4 percent, citing rising food costs. When setting monetary policy, the central bank considers retail or consumer price index inflation. Retail inflation for July is expected later today.
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