Wholesale price index-based (WPI) inflation eased to a 11-month low of 12.41 per cent in August on softening in the prices of manufactured and fuel products even as food items remained expensive. Although WPI inflation declined for three consecutive months in August, it remained in double digits for 17 months beginning April last year.

The inflation was 13.93 per cent in July and 11.64 per cent in August last year. While headline WPI eased in August, food inflation remained a concern. There has been a pick-up in the prices of vegetables, fruits, eggs, meat and fish and cereals mostly because of erratic rains. Wheat prices continue to be elevated after intense heat wave impacted summer crops.

The decline in the headline WPI inflation in the month was largely due to a fall in fuel and power inflation. In September last year, WPI inflation at 11.8 per cent was lower than the August 2022 print. Inflation in food articles in August rose to 12.37 per cent as against 10.77 per cent in July on account of costlier cereals, fruits and vegetables.

The rate of price rise in vegetables was 22.29 per cent during the month under review, while in potato it was 43.56 per cent. Inflation in cereals was 11.77 per cent, while in wheat and fruits it was 17.35 per cent and 31.75 per cent, respectively. In the fuel and power basket, inflation was 33.67 per cent in August against 43.75 per cent in July. In manufactured products and oilseeds, it was 7.51 per cent and (-) 13.48 per cent, respectively.

The RBI mainly looks at retail inflation to frame its monetary policy. Rating agency Icra said WPI inflation may to ease to 11-12 per cent in September and print in single digits thereafter. “The downside surprise was led by a lower-than-anticipated rise in fuel and global commodity prices,” Morgan Stanley said in a note.

US inflation

Inflation at the wholesale level jumped 8.7 per cent in August from a year earlier, a slowdown from July yet still a painfully high level that suggests prices will keep spiking for months to come. Wednesday’s report from the US Labour Department also showed that on a monthto-month basis, the producer price index — which measures inflation before it reaches consumers — declined 0.1 per cent from July to August, the second straight monthly decline.

Yet the better readings mostly reflect plunging gas prices and don’t necessarily point to a broader slowdown in inflation. A measure that excludes the volatile food and energy categories — so-called core prices — rose 0.4 per cent from July to August and 7.3 per cent in August.