WPI inflation rises sharply to 1.88% in July

New Delhi: Wholesale inflation rose to 1.88 percent in July as prices of some commodities increased in the first month of Goods and Services Tax (GST) rollout.

Inflation based on the wholesale price index (WPI) was 0.90 percent in June 2017 and 0.63 percent in July 2016.

The government data released on Monday showed that prices of food articles went up by 2.15 percent in July on a yearly basis. In June, the prices had contracted by 3.47 percent.

Vegetable prices which had witnessed a 21.16 per cent contraction in June, shot up by 21.95 percent in July.

However, manufactured products saw slight fall in inflation at 2.18 percent in July, compared to 2.27 percent in June.

In fuel and power segment, inflation witnessed a decline at 4.37 percent in July, over 5.28 percent in the previous month.

Apart from vegetables, the food articles which saw rise in prices include egg, meat and fish where inflation stood at 3.30 percent. Fruits saw inflation at 2.71 percent, cereals (0.63 percent) and paddy (3.47 percent).

However, potato continued to see deflation at 42.45 percent, pulses (-)32.56 percent and onion (-)9.50 percent.

The final print of May WPI inflation witnessed a little surge at 2.26 percent, as compared to provisional estimates of 2.17 percent.

A nationwide GST was implemented on July 1 which combined a plethora of central and state levies into a four tier tax structure of 5, 12, 18 and 28 percent for all goods and services.

Data released last week showed that industrial output hit a four-year low and contracted 0.1 percent in June, mainly on account of decline in manufacturing and capital goods sectors.

Earlier this month, the Reserve Bank cut policy repo rate by 0.25 per cent to 6 per cent citing reduction in inflation risk. The rate cut was the first in 10 months and brought policy rates to near 7-year low.

The RBI said it will endeavour to keep retail inflation close to 4 per cent but in the near term, there might be some uptick on account of pay commission payouts and price adjustments post GST rollout.