June WPI-based inflation cools to 15.18% from May's four-decade high

Inflation based on the Wholesale Price Index (WPI) for June lowered slightly from a 4-decade high in May. Remained at 15.18%, driven mainly by crude, food and oil prices. minerals and others in the world. For the third consecutive month, factory inflation reached 15%. WPI inflation in May was 15.88%, the highest since September 1991. 

 In June, the WPI for food, which accounted for 24.4% of the total, was 12.41% against 10.89% in May. Fuel and energy inflation, which reflects global crude oil and gas prices, stood at 40.38%, almost the same as last month. 

 Manufactured goods, which weighed 64.2 per cent, recorded inflation of 9.19 per cent, compared with 10.11 per cent in May, while primary commodity inflation held steady at a level of 19.22 per cent. What is still worrying is the WPI inflation of 15.18% in June based on a high of 12.07% in the same month of 2021. “While the easing of many of the global commodity prices is a comforting factor, volatile crude oil prices and the weakening of rupee against dollar continue to pose an upside risk to wholesale inflation number. The Food inflation will continue to inch higher due to accelerating vegetable prices. Consequently, we expect WPI to remain in double-digits till the second quarter of this fiscal,” said Rajani Sinha, Chief Economist with Care Ratings.

 Across subgroups, WPI inflation for LPG, gasoline and diesel increased by 53.2%, 57.8% and 54.9%, respectively, while world crude oil prices remained above the $100 mark in June.

Although the RBI is solely responsible for maintaining the CPI, WPI food inflation remains a concern as wholesale inflation seeps into the CPI. Economists expect MPC for another two rounds of rate hikes.