August 14, 2023 / 01:42 PM IST
Sensex Today | Rajani Sinha, Chief Economist
The wholesale price index (WPI) continued in a deflationary zone for the fourth consecutive month in July, helped by lower metals, chemicals, textile, manufactured food, and mineral oils prices. However, the pace of annualised decline in WPI slowed significantly compared with the previous two months, with the spike in food prices led by vegetables restricting the downside. Consequently, sequential momentum in WPI turned positive after two months.
If the food prices continue to trend upward, the deflationary trend could end, and WPI inflation could turn marginally positive in the coming months. Additionally, the uptrend in global crude oil prices, global edible oil prices, and uneven monsoon distribution domestically pose an upside risk to the outlook.
Nevertheless, we expect the WPI inflation for this fiscal at a subdued level (in the range of 1-2%) with positive implications for the retail inflation trajectory.
