Informist Poll
Jul WPI inflation seen easing to 3-month low of 2.2%
This story was originally published at 19:33 IST on 12 August 2024
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By Shubham Rana
NEW DELHI – India’s WPI inflation is likely to have fallen to a three-month low of 2.2% in July from a 16-month high of 3.36% in June, according to an Informist poll of 12 economists.
WPI inflation is expected to have come down last month, mainly because of the statistical effect of a high base as the overall index had risen 2.1% sequentially in July last year. The commerce and industry ministry is scheduled to release WPI inflation data for July at 1200 IST on Wednesday.
The base effect is such that WPI inflation would fall to 1.18% in July if the overall index remains unchanged from June. If WPI inflation eases to 2.2% in July, as projected, it would mean the overall index rises 1.0% on a sequential basis, higher than the historical sequential average increase of 0.7% in July.
The month-on-month rise in the overall WPI index is likely to be driven by higher food prices, particularly vegetables.
According to data from the Department of Consumer Affairs, wholesale prices of tomato jumped 61.6% on month in July, while prices of onion increased 24.0%. The wholesale price of potato also increased 18.8% last month compared with June.
Prices of some pulses also rose last month, with tur rising 4.0% and gram dal rising 2.3% on month.
Core WPI inflation, which reflects inflation excluding food and fuel, is expected to rise to near 1.0% in July due to downward pressure on global commodity prices on adverse base effect, Union Bank of India said in a note. Core WPI inflation was 0.9% in June.
WPI inflation remains well below CPI inflation, which fell to a 59-month low of 3.54% in July.
"Going forward, WPI is expected to be led by global commodity prices with recent drop on recession concerns favorable for India WPI while domestic food price trends need close watch amid uneven monsoon distribution,” economists at the Union Bank of India said.
WPI inflation stayed in negative territory in seven of the 12 months in 2023-24 (Apr-Mar) and averaged (-)0.7% during the year.
The following is a summary of the poll by Informist on WPI inflation in July and the details of estimates by respondents, in ascending order:
Range of expectations: 1.6-3.8%
Mean: 2.3%
Median: 2.2%
Mode: N.A
|
ORGANISATION |
WPI INFLATION ESTIMATE |
|
Nirmal Bang Institutional Equities |
1.55% |
|
STCI Primary Dealer |
1.8% |
|
ICICI Bank |
1.81% |
|
YES Bank |
1.87% |
|
State Bank Of India |
2.03% |
|
ICRA |
2.1% |
|
Bank of Baroda |
2.2% |
|
Union Bank of India |
2.23% |
|
Motilal Oswal Financial Services |
2.4% |
|
India Ratings and Research |
2.5% |
|
CareEdge Ratings |
3.4% |
|
Capital Economics |
3.8% |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Vidhi Verma
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