New Delhi. Wholesale inflation rose to a 16-month high of 3.36 percent in June due to rising prices of food items, especially vegetables and manufactured products. This is the fourth consecutive month when wholesale inflation has increased. Wholesale Price Index (WPI) based inflation was at 2.61 percent in May. In June 2023, it was 4.18 percent below zero.
The wholesale inflation rate was 3.85 percent in February 2023.
The Ministry of Commerce and Industry said in a statement on Monday, “The main reason for the increase in inflation in June 2024 is the increase in the prices of food items, crude oil and natural gas, mineral oil and other manufactured goods etc.” According to the data, inflation of food items increased by 10.87 percent in June, while it was 9.82 percent in May. The inflation rate of vegetables was 38.76 percent in June, which was 32.42 percent in May. The inflation rate of onion was 93.35 percent while the inflation rate of potatoes was 66.37 percent. The inflation rate of pulses was 21.64 percent in June.
In the month under review, inflation in fruits was 10.14 percent, cereals 9.27 percent and milk inflation was 3.37 percent. ICRA Chief Economist Aditi Nair said that the increase in wholesale inflation was widespread in June 2024. Prices have increased in all major sectors except fuel and electricity. She said that due to a favorable comparative base as well as some softening in global commodity prices, wholesale inflation is expected to come down to about two percent in July 2024.
Regarding oil prices, Nair said, “The average price of crude oil for India has been quite volatile so far in July 2024. Due to the difference in demand and supply, an increase is being seen on a monthly basis.” He said that high crude oil prices may increase pressure on wholesale inflation in the current month.
The inflation rate of fuel and electricity was 1.03 percent. This is slightly less than 1.35 percent in May. However, the price increase of crude petroleum and natural gas during the month was in double digits at 12.55 percent. Inflation in manufactured products was 1.43 percent in June, which is higher than 0.78 percent in May. The increase in wholesale inflation in June was in line with the retail inflation figures. According to the data released last week, retail inflation has increased to a four-month high of 5.1 percent in June. The Reserve Bank of India mainly takes retail inflation into account while formulating monetary policy.