Wholesale inflation in India reached a 16-month high of 3.36 percent in June due to increases in food costs, particularly vegetables and manufactured goods. This was the fourth consecutive month that inflation increased. The wholesale pricing index (WPI)-based inflation rate was 2.61 percent in May. It was -4.18 percent in June 2023.

Wholesale inflation reached a peak of 3.85 percent in February 2023

"The positive rate of inflation in June 2024 is primarily due to increases in the prices of food articles, food product manufacturing, crude petroleum and natural gas, mineral oils, other manufacturing, and so on," the Ministry of Commerce and Industry said in a statement on Monday.                                                                                                                                                      

According to the figures, inflation in food products jumped 10.87 percent in June, compared to 9.82 percent in May. Inflation in vegetables was 38.76 percent in June, up from 32.42 percent in May. In the month under examination, onion inflation was 93.35 percent, while potato inflation was 66.37 percent. Pulses inflation increased by 21.64 percent in June.

During the month, inflation in other food products such as fruits was 10.14 percent, cereals 9.27 percent, and milk 3.37 percent. According to ICRA Chief Economist Aditi Nayar, the increase in WPI inflation in June 2024 was broad-based, with all major areas except gasoline and power leading the way.

Looking ahead, she expects headline WPI inflation to fall to around 2% in July 2024, owing to a strong base and some softening in global commodity prices. Regarding oil prices, she stated that the average price of the Indian crude oil basket has been highly volatile in July 2024, owing to supply-demand mismatches, with a month-on-month gain ($86.6/bbl up to July 11).

Higher crude oil prices may impose higher pressure on headline WPI inflation this month, she noted. In the gasoline and electricity basket, inflation was 1.03 percent, slightly lower than 1.35 percent in May.

However, the price increase in crude petroleum and natural gas was double digit, reaching 12.55 percent throughout the month. In manufactured items, inflation was 1.43 percent in June, up from 0.78 percent in May.

The increase in June WPI was consistent with the monthly retail inflation figures. Retail inflation reached a four-month high of 5.1 percent in June, according to figures released last week.The Reserve Bank of India (RBI) primarily considers retail inflation while determining monetary policy.