“The high rate of inflation in August 2021 is primarily due to rise in prices of non-food articles, mineral oils crude petroleum & natural gas manufactured products like basic metals food products textiles chemicals and chemical products etc. “The firming up of inflation despite weak demand conditions may appear somewhat perplexing, but as manufacturers are increasingly passing on the rising input costs to their output prices, both wholesale manufacturing and core inflation is showing sustained high inflation,” Mr Sinha noted.
However, double digit WPI would prevail for the next few months given the base effect,” he said. “Going ahead, there would be some moderation due to primary prices easing leading to lower inflation rates. The wholesale price trends are at a divergence with retail inflation which moderated slightly to 5.3% in August from 5.6% in July.ĬARE Ratings’ chief economist Madan Sabnavis said the wholesale inflation for August was higher than expected with all the three segments - primary, fuel and manufactured goods witnessing higher inflation in August. On a month-on-month basis, the Wholesale Price Index (WPI) rose 1.04% in August, after three months of a sequential increase of about 0.6%. Overall wholesale inflation had moderated to 11.16% in July after hitting a record high of 13.11% in May. “In spite of the primary food articles slipping into disinflation and a favourable base, the WPI inflation posted a surprise uptick to 11.4% in August, taking some sheen off the welcome easing displayed by the CPI inflation in the same month,” she said. Sinha said.Ĭore WPI inflation, which leaves out fuel and food items, has also hit an all-time high of 11.1% in August, continuing an uninterrupted hardening streak of 15 months, flagged ICRA chief economist Aditi Nayar. “Edible oil inflation has been in excess of 35% since March and basic metals have been above 20% since April,” Mr. “Within the fuel and power category, LPG, petrol and diesel witnessed inflation of 48.1%, 61.5% and 50.7% respectively,” pointed out Sunil Kumar Sinha, principal economist at India Ratings and Research, stressing that such high fuel inflation levels tend to transmit across all sectors as they push up transport spending as well as input and wage costs.īesides crude oil, prices of commodities like edible oil and basic metals, where global prices are directly passed through to users, have also flared up, he said.
The WPI had risen 0.41% in August 2020, so the base effect also came into play. The pace of price rise in fuel and power as well as primary articles firmed up to 26.1% and 6.2%, respectively, in August after a dip in July, even though food price inflation moderated from 4.46% in July to 3.43%. Inflation in manufactured products escalated for the fourth month in a row to 11.4% as the second order effects of high fuel prices kicked in. Inflation in wholesale prices resurged to 11.39% in August, staying in the double digits for the fifth month in a row.
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