Inflation in India’s wholesale prices accelerated to 3.4% in June, the highest in 16 months, from 2.6% in May, led by a spike in food inflation to 8.7% and a near-doubling in the rise of manufactured products prices to 1.43%.
Pricier vegetables, cereals, and fruits spurred the rise in food prices paid by Indian consumers to a six-month high of 9.4% in June, escalating the headline retail inflation pace to a four-month high of 5.08% in June, from a revised 4.8% in May, as per data released on Friday.
On a month-on-month basis, wholesale prices were up 0.4% in June, with the Food Index rising 2.5%, the fastest so far this calendar year, and over four times the 0.6% pace recorded in May.
By contrast, manufactured products costs rose 0.14% over May in June, the slowest rise in four months, while fuel and power inflation remained sequentially negative for the fourth straight month at -1.93%
“Positive rate of inflation in June 2024 is primarily due to increase in prices of food articles, manufacture of food products, crude petroleum & natural gas, mineral oils, other manufacturing etc,” the Commerce and Industry Ministry said.
Inflation in vegetables’ wholesale prices surged to 38.8% in June from May’s nine-month peak of 32.4%, with the rise of onion and potato prices speeding to 93.4% and 66.4%, respectively, from about 58% and 64% in May.
Pulses (21.6%), paddy (12.1%), fruits (10.1%) and Cereals at 9.3%, were other pain points in the latest wholesale inflation print that lifted primary food articles inflation to 10.9% in June.
For producers, beyond food items, a 9.6% rise in prices of minerals, and a 12.55% uptick in crude petroleum and natural gas prices, were also a major cause for higher input costs.
The price rise in minerals is the highest in five months, while that in petroleum and natural gas is the steepest in at least six months.
“The average price of the Indian basket of crude oil has been quite volatile in July 2024 so far, on the back of supply-demand mismatches, witnessing an MoM rise ($86.6/bbl up to July 11). Higher crude oil prices might exert an upward pressure to the headline WPI inflation in the ongoing month,” said Aditi Nayar, chief economist at rating firm ICRA.
