Wholesale price-based (WPI) inflation jumped to a 16-month high of 3.36 per cent in June due to a spike in prices of vegetables, milk and some manufactured products, official data showed on Monday.
Price of vegetables surged by 38.76 per cent year-on-year in the wholesale market. Onion prices almost doubled, while potatoes became costlier by 66.37 per cent. Price of pulses rose by 21.64 per cent, as per data released by the Union Commerce Ministry.
WPI inflation stood at 2.61 per cent in May while In June 2023, there was a deflation of 4.18 per cent. June 2024 was the fourth consecutive month of WPI rising. Wholesale food inflation rose to 10.87 per cent in June from 9.82 per cent in May. Prices of manufactured food items jumped by 4.28 per cent year-on-year.
On a quarterly basis, the wholesale inflation rose to 2.38 per cent in April-June, the highest in five quarters. Food inflation in the quarter surged to a seven-quarter high of 7.39 per cent.
“The upward movement in the WPI inflation in June 2024 was broad-based, driven by all the major segments except fuel and power,” said Aditi Nayar, Chief Economist, ICRA.
Inflation in manufactured products remained in positive territory and inched up further to 1.4 per cent in June after staying in negative territory for most part of 2023-24.
“The outlook for food inflation has brightened due to anticipation of a normal monsoon, which is expected to bolster agricultural production,” said Rajani Sinha, Chief Economist, CareEdge Ratings.
“However, monitoring the monsoon's temporal and spatial distribution is critical. WPI inflation is expected to trend upwards as favourable base wanes and is estimated to average around 3 per cent in FY25,” Sinha added.
Meanwhile, a survey conducted by LocalCircles, a community social media platform, shows that the majority of households’ spending on vegetables have gone up by over 50 per cent.
Over 6 in 10 household consumers surveyed indicate that they are spending 50 per cent or more every week on vegetables as compared to previous months, LocalCircles said in a survey report.
Shortage in the arrival of vegetables and fruits in the mandis over the last few days has seen a spike in the prices of most fresh farm produce including onion, potato and tomatoes, the most bought vegetables by majority of the households in India.
Sunil Kumar Sinha, Principal Economist, India Ratings and Research said that WPI is likely to ease to 2.5 per cent in July 2024 due to a favourable base effect in food items. Food inflation in July 2023 stood at 8.3 per cent.