New Delhi: The wholesale price-based inflation eased to a three-month low of 15.18 per cent in June on a sharp decline in the prices of minerals, but food articles continued to remain costly.
June is the 15th consecutive month when the Wholesale Price Index (WPI) based inflation remained in double-digit. Last month, it touched a record high of 15.88 per cent. In June 2021, it was 12.07 per cent. Inflation in food articles in June was 14.39 per cent, as prices of vegetables, fruits and potato witnessed a sharp spike over the year-ago period. In May, the wholesale price inflation in food articles was 12.34 per cent. The rate of price rise in vegetables was 56.75 per cent, while in potato and fruits, it was 39.38 and 20.33 per cent, respectively. The WPI inflation in minerals dropped sharply to 8.55 per cent in June from 33.94 per cent in May.
In the fuel and power basket, inflation was 40.38 per cent, while in manufactured products and oil seeds, it was 9.19 per cent and 2.74 per cent, respectively. Inflation in crude petroleum and natural gas was 77.29 per cent in June. Icra Chief Economist Aditi Nayar said minerals and basic metals displayed a sharp month-on-month correction in June 2022, as fears of an impending global recession unfolded, dampening commodity prices. "We expect the WPI inflation to ease to 13 per cent in July 2022, reflecting the ongoing correction in global commodity and fuel prices as well as domestic food prices," Nayar said.
Also read: WPI inflation spikes to record 15.88% in May on costlier food items, crude oil
She said that the RBI could hike interest rates by 60 bps over the next two reviews, taking the repo rate to 5.5 per cent by September 2022, followed by a pause to ascertain the momentum of economic growth. CRCL LLP CEO and Managing Partner DRE Reddy said the key reason for the high inflation level is rising food, fuel, and vegetable prices. The cut in excise duty announced by the government and good monsoon year may ease inflation a little as we move forward in the year. "The geopolitical tensions and crude price movement and commodity prices will guide WPI inflation going forward," he added. The RBI mainly looks at retail inflation to frame monetary policy. The next meeting of the RBI's interest-setting monetary policy committee is on August 2-4.
Retail inflation remained above the Reserve Bank's comfort level for the sixth month in a row and was at 7.01 per cent in June. The RBI projected inflation to be at 7.5 per cent in the June quarter (Q1) and 7.4 per cent in the September quarter (Q2), before easing to 6.2 per cent in the December quarter (Q3) and further to 5.8 per cent in the March quarter (Q4) this fiscal. To tame stubbornly high inflation, the RBI has hiked the key interest rate by 90 basis points in the last two months. The central bank also raised the inflation projection by 100 basis points to 6.7 per cent for 2022-23. (PTI)
