WPI at 4-month Low

India’s wholesale inflation moderated to a four-month low of 4.53% in August from 5.09% in July as softening prices of food articles, especially vegetables, offset a surge in fuel prices.

Inflation, as measured by the Wholesale Price Index, was 3.24% in August 2017.

Inflation in fuel and power softened slightly to 17.73% in August from 18.1% in July.

Data released earlier this week showed retail inflation easing to a 10-month low of 3.69% in August, below the Reserve Bank of India’s target rate of 4%.

Core inflation hardened to 5% in August from 4.8% in July, suggesting strong demand conditions in the economy. August core inflation is the highest in the 2011-12 base series.

Moreover, the impact of increased minimum support prices of kharif crops is expected to reflect in inflation from October.

ICRA’s principal economist Aditi Nayar said rising core inflation could prompt a majority of the members of the RBI’s monetary policy committee to vote for a rate hike in October.

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