Wholesale inflation rose to 9.87% in June, Rising Food Prices Main Cause

New Delhi, July 14: The wholesale inflation of India rose to 9.87 per cent in June, up from 9.68 per cent recorded in May, according to government data released today.

Inflation in primary articles rose to 7.0 per cent in June from 4.99 per cent a month earlier.

The Wholesale Price Index (WPI)-based inflation was driven primarily by higher prices of food articles, mineral oils (containing petroleum products), basic metals, and chemicals and chemical products, the Commerce and Industry Ministry said.

The All India WPI for all commodities rose to 110.2 in June from 109.9 in May, reflecting a broad-based increase in wholesale prices across sectors.

Food prices remained the biggest contributor to June’s increase in wholesale inflation.

The WPI Food Index climbed to 6.14 per cent year-on-year in June from 4.49 per cent in May, signalling a sharp acceleration in food inflation.

On a month-on-month basis, prices of food articles increased 3.75 per cent, non-food articles rose 1.43 per cent, while mineral prices gained 0.58 per cent. However, crude petroleum and natural gas prices edged down 0.08 per cent compared with May.

Inflation in the fuel and power category came down to 27.41 per cent in June from 30.33 per cent in May, helped by lower mineral oil prices on a monthly basis.

Electricity prices were largely unchanged during the month.

Even so, petroleum-related products continued to post steep annual gains.

Crude petroleum and natural gas prices were 34.75 per cent higher than a year ago, although the pace of increase slowed significantly from 61.51 per cent in May. Mineral oils registered an annual inflation rate of 46.48 per cent.

Inflation in manufactured products, which account for nearly two-thirds of the WPI basket, remained unchanged at 7.48 per cent in June, suggesting that cost pressures for manufacturers remained elevated.

Within manufacturing, prices increased across 22 of the 24 industry groups on a month-on-month basis.

The biggest increases were seen in basic metals, chemicals and chemical products, food products, machinery and equipment, and other manufacturing, while prices of pharmaceuticals and fabricated metal products declined.

Among key manufacturing segments, annual inflation stood at 12.31 per cent for basic metals, 12.78 per cent for chemicals and chemical products, 11.03 per cent for electrical equipment and 10.85 per cent for textiles.

Producer prices also continued to rise during the month. Based on Reuters’ calculations, producer prices increased 9.57 per cent year-on-year in June, compared with 9.38 per cent in May.

Separately, the government said the Output Producer Price Index (PPI) for all commodities increased to 109.9 in June from 109.6 in May, indicating that factory-gate prices continued to edge higher.

Revised WPI series

The June inflation data has been compiled using the government’s revised WPI series with 2022-23 as the base year, introduced last month to better capture changes in the structure of the economy.

The updated series expands the commodity basket to 957 items from 697 under the earlier 2011-12 base year and includes newer products such as solar electricity, wind electricity and nuclear electricity.

The ministry also revised April’s final WPI inflation upward to 8.36 per cent from the provisional estimate of 8.26 per cent, after revising the WPI index to 108.9 from 108.8.

The provisional estimate for June was compiled with a weighted response rate of 82.6 per cent, while the final April estimate was based on a 97.5 per cent response rate. (BVI)