India’s Wholesale Inflation Eases More Than Expected in August
2022.09.14 14:41
Indian wholesale inflation fell more than expected in August, data showed on Wednesday, as a slight cooling in oil prices and rising interest rates helped ease rampant price pressures on the economy.
The (WPI) grew 12.41% in August, data from the Ministry of Commerce and Industry showed, compared to last month’s reading of 13.93%, and below estimates of 13%. The reading shows that wholesale inflation likely peaked in May, when it hit a record high of over 16%.
Earlier this week, data showed that India’s grew slightly more than expected in August, due to higher food prices.
With the WPI staying in double-digits for a 17th straight month, and with retail inflation snapping a three-month downtrend, the is likely to hike interest rates again when it meets later in September.
A Reuters poll expects the bank to raise rates by 50 basis points. The bank is also expected to keep raising rates until retail inflation falls within its annual target range of 6%.
India’s spike in inflation this year was primarily driven by rising oil prices in the wake of the Russia-Ukraine crisis. But with crude prices now retreating from the year’s peaks, some pressure on the Indian economy has eased.
Increased oil prices caused a sharp depreciation in the , which has stuck to near record lows for the past three months. The rupee was also pressured by rising interest rates in the U.S.
Food prices, particularly those of wheat, rice, and sugar, also shot up this year due to an uneven monsoon. The government recently imposed curbs on rice exports, adding to earlier controls on wheat and sugar shipments as it struggled to keep prices capped.
Retail inflation, which is the RBI’s favored inflation gauge, is expected to average 6.7% in fiscal 2022.
